Risk Management Of CN Corp’s Iron And Zinc Investment Project

CN Power Development Corporation was originally focusing on equityinvestment of terminal projects. In2006, the company was renamed CN InvestmentGroup Co., Ltd, due to the changes in the macroeconomic status in China and at thesame time, the company managed to switch the main investment direction, fromsolepower investment to other industries as well. The expansion of investment coversfinance, real estate, energy development, high-tech bio-pharmaceutical technology,etc.Heilongjiang CN Investment Management is a division of the Heilongjiang CNInvestment Group whose main investment area includes mining and real estates. In2010, the company planned to cooperate with private companies in form of equityinvestment and bond investment and launched the DongNingYangMugou Iron andZinc Project and a new subsidiary was built. This paper is aimed at the study of thedecision-making process of this project as well as the management and administrationafter the investment.By studying the Iron and Zink Project of CN Investment Management, this paperstarts with the feasibility of the project covering economic assessment, thedecision-making strategy and investment process, industry background, technologymarket, the establishment of ownership structure, management process and agencyetc. in order to analyse the possible risks associated with the project and thereby,make the appropriate risk management strategy against the estimated risks. Thecontent focuses on standardized investment decision-making process and investmentmanagement mode, industrial risk aversion, sounding the corporate governancestructure, perfecting the management system and in-depth study of risk prevention and control in order to reduce moral hazard by mobilizing agents. This paper analysesthe similarities between the management modes of state-owned and privateenterprises. Furthermore, through the establishment of management system, the paperalso sheds light on preventing and controlling the risks associated with the equity andbond investment, under the prerequisite of the appreciation of state-owned assets,taking the interests of private shareholders into account.The risks associated with the equity investment of CN Investment Managementcan be divided into2aspects. The first one is the pre-investment risk, e.g. thefeasibility risk, the other is post-investment risk, or management risk. This paper aimsat the various risks associated with the investment process and project managementthat may occur and provides an in-depth research and analysis. The paper also statesthat in the implementation of the project investment, CN Investment ManagementCompany should target to regulate the decision-making process, make the feasibilityanalysis more exactly, implement the decision-making procedure strictly, have a goodgrasp of each link of decision-making procedure in order to mitigate risks. In terms ofproject management, the company should emphasize on supervision, services, and themoral hazard of agents. In terms of financial management, the company should adopta series of measures such as in-time funding reporting, frequent assessments onmonthly and annually financial reports in order to have a good understanding of thefinancial position.