Risk Management Theory Of Securities Companies In Transition Economies

With the deepening of financial reform and innovating of capital market, importance of securities companies has become increasingly prominent. Securities market is built on the basis of managing risk; how to manage risk effectively and scientifically is very important to the company’s operations and development. Therefore, the most important way to evaluate whether securities companies operating safely is that whether the risk management of securities companies is effective. Characteristics of the securities companies determine that they must have a core competence so that they can continue win in market. Comprehensive risk management is one of the important parts of core competence. From Everbright "816" incident and a series of risk events, it can be observed that the inadequate risk management will not only dampen the survival of securities company itself, but will also endanger the overall capital markets and financial systems. Therefore, exploring comprehensive risk management approach that adapting economic transformation restructuring and lining with company strategy has a very important significance.During the opening of Chinese capital market, risk management in China securities companies nominally from local risk management evolved into a comprehensive risk management. Many scholars have done a lot of research to risk management of securities companies to guide actual risk management in China’s securities companies. However, the domestic securities company’s risk management research is relatively weak; the application is relatively backward; capacity is relatively low; there is still a certain distance between securities company’s actual risk management practices and a comprehensive risk management theory. How to implementation of comprehensive risk management still need to be carefully research and long-term practice.In this paper, based on summarizing methods, theoretical basis and research findings associated with this study, we firstly demonstrate necessity of practicing comprehensive risk management and enhancing the core competitiveness for securities companies in theory. Secondly, a quantitative model used to measure the total risk, the core of risk management is established. Finally, using XY Securities company as an example, how to practice comprehensive risk management of securities companies in order to enhance the core competitiveness is described.