Research On The Optimization Of Credit Risk Management System Of XY Trading Company

In the current economic environment,the credit transaction,namely,advance payment or sell on credit,is really important and challenging in the fierce market competition,which also makes enterprises face the problem of credit risk management.This paper aims to study how to establish and fulfill credit risk management system with the development of business.Taking XY Trading Company as an example,this paper tries to optimize its credit risk management system with the guidance of Whole Process Credit Risk Management and COSO Enterprise Risk Management Framework(ERM 2017).It is found that there are some problems in the credit risk management system of XY Trading Company.Firstly,the staff are lack of credit risk management awareness since there is no cultural guidance at the strategic level of the enterprise.Secondly,the scientific enterprise risk management framework has not been set up and the authorization relationship are unreasonable as well as the management methods of credit.Thirdly,regarding the beforehand prevention,the customers with poor credit could be admitted in the credit list due to loose requirements of credit application and imprecise review.In addition,regarding the intermediate control,it is lack of initiative and static credit monitor to alarm before the expiry.Furthermore,regarding the afterwards tracing,there is no detailed guidance on overdue tracking and punishment about the ignorance.It is suggested that XY Trading Company should take the cultural guidance on credit risk management at strategic level to strengthen the awareness of the staff.In addition,they should set up the scientific Enterprise Risk Management Framework by issuing the credit risk management system and improving the credit relationship.What is more,in terms of beforehand prevention,they should establish a credit customer access evaluation system and strengthen advanced auditing based on 5C Credit Evaluation Method.In terms of intermediate control,they should keep dynamic tracking of credit customer business and react to abnormal dynamics in time.In terms of afterwards tracing,they should establish a hierarchical tracking procedure with definite responsibilities.This study is valuable for practice as it proposes a specific solution to optimize the credit risk management system to XY Trading Company and provides similar cases and experience to build the credit risk management system with stronger risk tolerance.