Problems And Improvements In Risk Management Of A Guarantee Corporation In Chengdu

Information asymmetry problems in traditional banking draw forth the industry of guarantee corporation.Through credit enhancement from such organizations,companies which are not qualified for banks' credit requirements are able to acquire a bank loan eventually.In a manner of speaking,the existence of guarantee corporation provides strong support for efficient allocation of resources in financial markets,and also plays a significant role in promoting the development of regional economy.“High risks and meanwhile low profits” is the distinct characteristic of guarantee corporation,and due to this fact,guarantee corporations pursue a "zero-risk" business philosophy.Its own business processes and risk management procedures appear to be particularly important.This paper,first of all,compared the differences of the guarantee corporation industry between Chinese and the other countries' over historical evolution and development,and illustrated the uniqueness of guarantee corporation industry in China.Secondly,this paper selected one guarantee corporation in Chengdu as a case study particularly,introduced the current organization structure,operation process and risk management system,and summarized the key reason of significant changes occurred over recent decades.Thirdly,this paper collected the risk projects of the representative company,and analyzed the data.Combined with the company's business data and the actual business case,we find out several flaws and loopholes which may exist in organizational structure,business process and risk management system.With the help of scientific research methods and advanced risk management theories,countermeasures for organizational structure,business processes and risk management are given by author.This study reveals that the case company has defects in the organizational structure,which leads to a consequence that risk management cannot participate in the whole process of business to form an efficient risk control system.There are obvious confusions existing in the operation flow.Risk management methods of the case company take the " expert method" which highly rely on the individual's judgements about macroeconomic environment and industry trends.For the long-term and healthy development of guarantee corporations,it is necessary to establish more rational organizational structures,to rebuild the operation flow which clearly defines rights and responsibilities,and to introduce more scientific and effective methods of analysis.