Risk Control Case Study On The Losses Of Derivatives Of China Eastern Airlines

The risk management of enterprises is an indispensable part of the process of enterprise management.The modern enterprise management theory not only requires the enterprise to explore its own industry profit growth point,but also emphasizes the importance of enterprise risk management stage.If management fails to pay attention,trading excessive risks for high returns is neither sustainable nor a potential crisis.The enterprise production and operation cost classification is many,the quantity is big,how to control the enterprise cost effectively is the question which every manager will face.In recent decades,China's major state-owned enterprises have set up their own financial services companies to provide solutions and measures for risk management.However,in recent years,there have been several cases of huge losses of derivatives,especially in the case of China Eastern airlines,which has issued a warning to our hedging mechanism and the effectiveness of hedging,which deserves our deep consideration.In this paper,by sorting out,analyzing and summarizing the huge losses of the hedging of the derivative products of China Eastern airlines,the problems existing in the derivative cases of China Eastern airlines and the causes of the problems are expounded,and the methods and approaches to solve the problems are proposed,which provide a reference for the price risk management in the production cost of enterprises.From the perspective of the application of financial derivatives in the risk management process,this paper specifically studies the risk control process and risk management means of airlines,combines price risk management with financial derivatives,and studies the interdisciplinary content of the two disciplines.This article mainly discusses the following content.1.Development status of China Eastern airlines and its main business scope;2.It elaborates the price risk that China Eastern airlines faces in the operation process,and the influence degree of different risks on the operation safety of the airlines,and analyzes and finds out the types of risks suitable for using financial derivatives to hedge;3.Introduced the cases of huge losses of China Eastern airlines,analyzed the main problems in the process of risk management of China Eastern airlines,and summarized relevant experience and lessons from the cases;4.In the process of risk management,what are the financial derivatives used by airlines and what combination strategies are used in the application of these financial derivatives;5.Learn from the experience of foreign airlines in using derivative hedging,explore new risk control concepts suitable for airlines,and combine with new theories and views in the risk control field in recent years,and apply them to the practice of risk control of airlines.This paper has the following innovations:first,the latest FRM financial risk management results are used to build a comprehensive risk management framework for airlines;Secondly,through the introduction of new derivatives,some of the more active derivatives in the financial market are combined with the purpose of risk management of airlines,which broadens the range of financial derivatives selection of airlines and makes hedging strategies more flexible and effective.