A Study On Risk Management Of Implementation Of WISCO’s Going Out Strategy

Wuhan Iron and Steel (Group) Corp.(hereinafter referred to as WISCO) is a largeiron and steel joint venture which was built after the foundation of New China. WISCO’sproduction is increased by7times after50years of development. During the "TwelveFive" period, the iron ore gap of WISCO will expand to more than90million tons. Theshortage of iron ore resources has become the "short board" for the WISCO’s current andfuture development. In the recent years, WISCO has implemented the "going out”strategy, accelerating the establishment of overseas ore resources support base andinvesting in overseas ore resources through equity participation, share holding, projectcooperation. Risk identification and prevention have increasingly become the mostconcerned problem in the implementation of WISCO’s "going out" strategy. Thus, thisresearch is of significant importance for WISCO’s further development.This thesis introduces the origins of the topic, the background and significance ofthis research, and a brief introduction of the basic concepts of foreign direct investmentand risk management. After reviewing the correlative researches of the foreigninvestment risk management in mineral resources, it determines the involved concepts.Based on the analysis of the specific processes in the implementation of WISCO’s "goingout" strategy it summaries the causes and characteristics of the risks, and establish thetheoretical framework of risk management of WISCO’s "going out” strategy. This papercategorizes the risks of investing overseas mineral resources; furthermore, it identifiessome individual risks through analyzing the risk origins during implementation processof WISCO "going out" strategy as well as the empirical analysis. On base of the categoryof the risks, this paper classifies and identifies risks for different levels through AnalyticHierarchy Process Theory and Fuzzy Comprehensive Evaluation Method It will help tobuild the risk prevention system for each level of the risk. Finally, with the comprehensive view all the aspects of risk identification, assessment, control, this paperbuilds the “Hierarchical classification centralized” risk management functionalorganization system during the implementation of WISCO’s “going out” strategy, toavoid risks, so as to achieve in doubling the scale of operation and the effective economyand meanwhile increasing the value of national assets...