The Application Research On Business Risk Assessment Of M Company Under COSO-ERM Framework

In the trend of global economic integration of the world economy, the modern large multinational companies are facing a variety of risks, such as economy, management, technology, resources, environment etc. Facing so many risks, how to make effective management is the urgent issue which need pay attention during the development of these companies. In this paper, using M company’s business risk assessment as a case study, using the concept that multinational companies’ risks are the sum of overall risk and all levels, analyzing the characteristics and problems of M company’s self-test system and weights of risks at all levels, evaluating the effectiveness of the implementation method and proposing advices of how to improve the current self-test system. Therefore, this rearch has a certain theoretical and practical significance.First of all, this rearch proposes the research background and significance and reviews the associated literatures, then presents the contents and methods. Secondly, standing on an independent third party perspective, this research describes the current situations and operating status of risk assessment of M company and points out the existing problems. Thirdly, using the concept of "overall- local" risk to do COSO-ERM hierarchical decomposition of business risks and based on the structure of hierarchical structure, combined with China’s Ministry of Finance documents on internal control and risk management, this research invited experts to summarize M company’s risk self-test project into six kinds of business activities under the four-level risk systems, while building the corresponding risk list and gave expert ratings and chose analytic hierarchy process(AHP) to weigh the weights of all levels of risk in this system. Finally, using gray system evaluation method to analyze the four-level risk systems and calculate evaluation value of M company’s business risk, six kinds of operational risk and various sub-risks, this research identifies the link needing focusing on in operational risks and proposes the corresponding suggestions for improvement.Results of this research indicate that through the interpretation of COSO-ERM framework for risk stratification and using this decomposition framework for M company’s business risk assessment is feasible and effective. It can be seen from comparision that the risk gray evaluation value of "Production", "Asset Management" and "Capital activity" in M company is lower than the value of the overall business risk evaluation, and thus, M company needs strengthen risk awareness in these three operation and improve the internal control system and the current self-test items. This hierarchy has practical significance on increasing and improving the future systematic enterprise risk management, meanwhile, provides a reference for Chinese enterprises going abroad.