Research On Risk Prevention Of Chinese Commercial Bank’s Internationalization

Multinational bank is the product of banking modernization andinternationalization. Its development track is formed by improving market economyand deepening business operating environment. The emergence and development ofmultinational bank is affected and promoted by banking development law.Multinational bank is a specific type of operating entity for profit purpose under theinfluence of economic globalization. Now, multinational bank plays a very importantrole in the global economy platform. With the increasing scale of business, itsbusiness network has covered almost every corner of the world. Risk and return aretwo sides of the same coin. Global benefit is companied with global risk. Banking is ahigh-risk industry, once the accumulated financial risk exposed, it would be easilylead to financial crisis. Once the crisis broke out, the financial system would be hit.And what more serious is the financial crisis would affect the whole economic systemoperation and even bring a devastating blow to the macro economy. So it is necessaryfor commercial banks to establish a sound and strict risk prevention mechanism.After China’s accession to the WTO, China is required to melt into theadvancement of the economic globalization more widely and deeply. So there is anurgent need to speed up the pace of internationalization development.Internationalization of Chinese banking started late, but the development is rapid inrecent years. However, global business types of commercial banks in China are notcomplete now, and the degree of internationalization is not enough yet. Also,compared with first-class commercial bank of the world, the risk prevention idea,method, system, technology and other aspects of China’s banking are still puny. Wemust set up a scientific, authoritative, effective long-term mechanism for preventingrisks, if China’s banking intends to walk further down the path to internationalization.Through the research thought which is from realistic foundation-casestudy-guard suggestion the paper aims to put forward an advice for Chinese Commercial Bank’s Internationalization. Risk prevention means that throughcontrol which is planned conscious and related and transnational activities, it couldprevent the loss or reduce the degree of loss, so as to ensure maximum benefit. Whatis called: knowing the enemy and yourself you can fight a hundred battles and winthem all. In order to prevent risks, first of all we should know all the risks that wemay encounter in the progress of commercial bank’s internationalization and analyzetheir characteristics. These risks include market risk, credit risk, operational risk,liquidity risk and country risk. Secondly, we need analyze the reality environment ofrisk prevention of Chinese commercial bank’s internationalization by using SWOT.Thirdly, we should collect the related information and data which is about riskprevention in HSBC, and think about the reason for brilliant achievements andsuccess against risks in the road of internationalization. Finally, we should come upwith some specific advice about constructing a long-term mechanism of riskprevention of Chinese commercial bank’s internationalization...