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Lead: how to promote to improve the overall risk control capability and thus help the “bigger
guests | Founder Products Group Limited risk control director Zhang to Xuan reprint please contact the poker author Jun (ID: puoker) Authorization
interview background: “bigger and stronger” is the common goal of state-owned private enterprises.
If the “big” means that these large companies occupy in the economic lifeline of the national economy and the status, then the “strong” refers to must be in the economic situation in the whole complex of the ability to “anti-risk”!
risk often comes from two parts, one is the risk of intense game between the economies outside the country brings.
Also part of the risk, comes from their own for the entire internal risk management processes to control.
When the distance vision match the size of strength.
Large enterprises if there is enough confidence in their own ability to control the wind?
The reality is, the ability to control the wind and current situation of domestic enterprises, domestic yet have not done a comprehensive analysis of an organization and analysis, let alone push to improve the overall risk control capability and thus help the “bigger and stronger”?
Poker Finance to focus on information services and the bulk of the financial sector entities, for the bulk of this international field of strong property has accumulated more complete, willing and able to do work in all organizations to risk control
carding and analysis capabilities.
poker hand in CME Chicago Business Finance jointly organized “2017 China Enterprise Risk Management Forum”, do promote Chinese enterprises to enhance their ability to control the wind pioneer.
Poker Finance promised, will be an interview, special and other forms of coverage and publicity for the show with these large financial sector “wind control business models.”
Now is our time to keep his promise.
For Mr. Zhang in Xuan Founder Products Group Co., Ltd. Wind Control Director Interview “Founder Products: deadline forerunner of the risk control system (Part I)” shared, today, next
the same applies to the party!
PUOKE Interview About Us
Founder Products Group Ltd. (hereinafter referred to as “Founder property”)
Over the years a good business reputation of the industry and the concept of the times, living in the commodities industry leading position.
Founded 16 years ago, the company’s average annual revenue growth rate remained above 30% success among the one hundred billion club.
Meanwhile, Founder property always adhere to the strategic development of ideas spot trade and finance combination of risk control important component of a business strategy, since 2004 to get involved in the commodity business since, risk control system on
will build, was born.
Today, it has developed into a trading and investment in one of the international commodity supply chain service provider for upstream and downstream customers to provide integrated supply chain services and risk solutions in the investment research and trading risk management, great to learn from
Founder property is a subsidiary of Founder Group, is one of five major industry groups, the main business scope of commodity spot trading, warehousing and logistics services as well as investment and production, business types
the covered commodity metal mining, energy and chemical, agricultural products and other raw materials, industrial products, give full play to the advantages of large state-owned enterprises, trading operations through practical business research and specification, to ensure sustainable development in the industry.
full interview with:
risk of diverse types and the objective existence of multi-channel multi-tool for preventing risk management
In the bulk industry,
the risks faced as diverse as market risks, customer credit risk, operational risk, and so on.
For Founder property, how to obtain risk information, access to what, what tool to use for risk management, these are the need to focus on the subject.
➤ Poker Finance: Founder property point of view, in the bulk industry, the risk of facing what?
Zhang in Xuan: the bulk of the industry, as a blend of traditional trade and finance these two properties, it’s a special risk there:
First, the market risk, which is the risk of financial derivatives or spot price volatility caused.
Second, customer credit risk, ie the risk of counterparty default.
Third, operational risk, operational risk can be divided into roughly two categories are business people or functions in violation of the existing institutional system processes, leading to operational level some risk; one is regulatory violation
departments, such as the provisions of the SFC and the Stock Exchange, trading risk category appear.
Fourth, liquidity risk, which is the need to focus on, because the bulk of trading is a capital-intensive business, you need a lot of money to guarantee the implementation of the business, once the capital, such as financing appeared
liquidity risk, will also affect business.
Fifth, the risk of the macro side, which also involves the risk of national policy, because the bulk of raw materials like inside all industrial, are closely related with people’s livelihood, the risk of some big policy level
It will have some impact on the whole business.
This is probably the main types of risk.
risk of other conventional classes also exist, have also cited some examples of risks such as physical goods rights; such as warehousing and logistics risk, in the process of storage and logistics, the goods were sold or transportation, warehousing
the process of loss and so on, these are also in this area which are concentrated in several categories of risk.
➤ Poker Finance: According to the existing risks, access to risk information required What?
to Zhang Xuan: From our perspective, we always wanted to build an eco-system of risk management.
Maintaining effective internal and external, timely communication, it allows us to identify the first time on the market, some of the information circulating in the industry.
Inside, through communication with the business sector, will be able to discover first-hand information on the front line, such as whether to trade the opponent capital chain tension, and so on.
Also through communication with relevant departments, through their channels to some of the risk information collection over.
exterior, through intermediaries, credit data collection agencies, credit rating agencies, law firms and a number of other partners, can understand the market as well as some of the potential risk of the counterparty, which is externally obtained data
Through these methods is probably the channels, to grasp the various types of risk information timely.
➤ Poker Finance: risk in foreign exchange, such as the recent continuous appreciation of the yuan, will have an impact on trade, in this regard, the channels to collect information related to what?
Zhang in Xuan: early on, we set up a foreign exchange management committee as well as foreign exchange management team, they will be dynamic to study, to follow up the entire foreign exchange market
fluctuations make a relatively independent judgment, this judgment will be shared with the General Office and the corresponding business units, communication, decision-making in order to support the business.
Of course, we will communicate with a number of research institutions, a reference to their views, such as foreign investment banks, domestic banks, foreign exchange in some products, OTC products, are close and multifaceted cooperation,
they will give us advice.
All in all, combined with their own judgment, and then reference the views of outside agencies, to make a final decision, then maybe it will take a direct hedge or hedge made by way of purchase of foreign exchange products, thereby to avoid foreign exchange
risk, even to benefit from such a risk.
➤ Poker Finance: What would risk management tools used to prevent or control the risk?
to Zhang Xuan: you want to expand this to say, will be very specific, because different risk management module will have a dedicated tool.
Such as the previously mentioned credit evaluation system, logistics management systems, transaction evaluation system, internal control system and so on.
Different wind control module, will have a different system.
➤ Poker Finance: You mentioned a word, quantification, when conducting risk management, quantitative evaluation is also an important aspect.
Founder property will quantify the risk assessment it?
to Zhang Xuan: quantify risk management is actually doing more high-end goal, in fact, for most businesses, are lower than this level, or up to
less than one hundred percent to quantify, there may be some qualitative and others are quantitative.
We are also in this stage of the energy as much as possible to quantify, can not be quantified, it might give a qualitative evaluation.
At present we can do to quantify, such as assessment of credit risk exposure by marking to market, as well as the analysis of aging, DSO and other indicators, it is possible to identify the overall corporate credit exposure, therefore,
it can be done to quantify.
For the management of logistics, we also issued a quantitative standards.
At the end of trading, there are positions statistics, if it is of arbitrage, the arbitrage strict proportion, which is quantified in one direction.
for different risks, might have a different quantitative risk models like VaR values, etc., we are also trying.
But all the internal risk if companies want, have done to quantify, it takes time and process, and can not be quantified in order to quantify, need to accumulate to a certain stage in the data, or the fine management of reach
when a certain extent, to be able to promote comprehensive.
quantifiable as far as possible to quantify the potential risk of loss may cause you to have an objective judgment, but also can play a supportive role at the firm level decisions.
However, if the quantitative, subjective man-made problems do quantization process, but this is not the objective.
prepared to deal with measures to ensure that the situation controllable domestic base spread betting arbitrage forerunner
In the futures trading business enthusiasm for the rising
Founder futures on the property already has a mature approach in the domestic-based spread betting, arbitrage aspect, also always in the forefront.
For the market to determine the circumstances of any deviation from that transaction would exist, panic is useless to complain, from industry, supply and demand, the macroeconomic point of view to understand, in advance prepared to deal with measures to ensure that the situation controllable,
moving steadily, eventually, Founder property to achieve a robust compounding growth.
➤ Poker Finance: Today, many enterprises do hedging, options, futures are combined with business, Founder property is also involved, do you think in the field of commodities, hedging effect is kind of how
to Zhang Xuan: hedging can be said that has always been our core business.
Founder property has not been a high risk appetite of the company, has been advocated to achieve steady growth of compound interest formula, so our most basic business model is now on the hedging, arbitrage, and thus started.
In 2004, the country has no mechanism to do this, we had already started doing arbitrage, so we have always said that we are the Basis of arbitrage trading or a pioneer
In this regard, the results from the previous practice of view, is very effective.
First of all, from a defensive point of view, the current period by hedging, risk can be locked bulk raw material price volatility itself, to ensure that in the implementation of the contract, not a corresponding risk of default.
but more often, or active angle.
We will take the initiative to pursue arbitrage space, to explore the irrational market base spread or difference, seize this opportunity to approach, then, such as the irrational spread or difference time-based return, we will be able to secure earnings
For some of the more high risk of derivative instruments, such as options, forwards these tools, we will use, but relatively speaking, in the course of the operation will be more cautious.
➤ Poker Finance: You just mentioned, the property is a pioneer founder Basis trading, poor understanding of the group should be more profound, how do you think the impact of basis for hedging effect?
to Zhang Xuan: This is very important, even if the difference between the groups can not be clearly identified, it can not achieve the goal of hedging or arbitrage.
According to the understanding of the industry, from the perspective of supply and demand to understand, explore spreads or irrationality in the basis, then a suitable point to go back and wait, in order to achieve hedging or arbitrage space
If you can not have these basic, no understanding of the industry, just to find a time approach, the final result may be, might as well do.
Because if you do backwards, it may be even worse than unilateral positions held.
So, basis trading definitely need to have a depth of understanding of the background of the whole industry, combined with the construction of a number of models to be able to find a good market entry point, and ultimately earn money.
Poker Finance: Prior to the transaction, whether the base is poor, the market appears to determine deviation situation occurred?
Zhang Yu Xuan: any transaction there will be such a situation, the key is, once there, if there is a good way to solve, such as stop in time, or take other effective strategies, this risk hedged.
In other words, it is impossible to crack shot, measures must be addressed.
The high probability of things you can do right, while some small probability event occurs, there is a good response measures, to minimize the risk or circumvented, it can be had.
➤ Poker Finance: the amount of money large enough, especially for a small number of newly listed species, the market can easily be manipulated.
This also can be found, the futures market is still relatively large speculative forces, it will not appear unreasonable rise fell futures market, resulting in an adverse impact on the spot market price?
to Zhang Xuan: futures rose fell in the spot market will certainly have an impact, especially for some small species, the impact is even more increase the number.
Thus, while we are involved in most of the species, but for some of us to judge maneuverability relatively strong, while the liquidity of the stock relatively poor varieties, will be more prudent to participate or not to participate.
I think, in large circles, everyone should have their own relatively professional judgment, ultimately will not get involved, it depends on everyone’s appetite for risk.
➤ Poker Finance: If a loss in risk management, then the pressure will not be great?
to Zhang Xuan: will do since the early response measures, if found wrong, they will stop in time.
Therefore, it should be said, always make sure the transaction within a controllable range, exposure does not appear hugely magnified, resulting in loss of control of the situation.
So, we have the greatest potential loss, and my heart has a bottom.
Our CEO has stressed all we seek is robust growth of compound interest formula, rather than the number of futures trading agencies as the pursuit of explosive growth or profits.
Achieved each year a small step in the long run is also very impressive.
risk management culture focused on building toward a more professional direction
Founder property existing risk management system is very obvious advantages, such as self
system, rapid response, improve the response mechanism, it is worth learn from many companies, but in the financial and property transactions quantify, but also to continue their efforts in improving the course.
➤ Poker Finance: the face of risk management, risk management culture Founder of the property is kind of how it?
to Zhang Xuan: In fact, I mentioned earlier the contents inside, for our risk management culture, has been reflected.
Founder property is not high preference for high-risk pursuit of a more robust type of development, advocated the creation of value through risk management.
the past few years began, have internal risk management training series, basically there will be about ten per year, we will ask some colleagues, professionals, as well as internal company more professional staff do share,
content is also from a risk business model to internal trade, credit and other aspects are involved, want to risk management through training series, and establish overall risk control awareness.
This is at the corporate level.
at all other levels, there are also communication.
For example, each line will go on a regular basis to do research interviews, we will promptly collect different opinions recommendation.
We have stressed that, between functional departments and business units, risk control between departments and business units, should be the relationship between the partners, risk control department assumed, is boosting management, partner role
instead sing a different tune with the business, or limit their development, the role of opposition.
➤ Poker Finance: Do you believe the Founder of the property risk control systems What are the advantages?
Zhang in Xuan: I think our risk control system is more systematic, and in the peer, it might all aspects, but relatively fragmented.
depth, after the exchange with many companies can say that in the depth of some modules, we are in the forefront.
For example, the model system of credit management, through years of accumulation, year after year improvement, constant optimization iterations, eventually a set of very detailed evaluation system.
But many companies do not, is a direct reference to a third party.
rights in goods, warehousing and logistics management, we also have a set of mechanisms, such as regular monitoring, inventory and so on.
And some emphasis on traditional trade enterprises, but then could not pay much attention to these aspects, the effort is not so much, more, or dependent on external services.
as well as rapid response mechanisms, coping mechanisms, have a special agency to deal with, timely resolve out some of the risks of sudden.
mainly three points.
➤ Poker Finance: If there is to improve the existing air space control system, Founder working to improve the properties most want to have what?
Zhang in Xuan: At the beginning I mentioned, commodity industry is characterized by the combination of industry and finance, then the risk control system must also be able to
both advantages and characteristics of both.
I think that the future of room for improvement, more or financial property in this area can be more professional, to achieve a higher degree.
For example, trading strategies and trade management in these areas, to learn from some of the better financial institutions make reference to their management.
Of course, this may take some time, because the front is also mentioned, we deal not so varieties of standardization, simplification, more personalized service, strictly to apply other people’s things
it may not be so applicable, needs to be done on the basis of a number of reductions in its revision, to make some adaptive changes, perhaps try some of the other needs to be done, so that it can be achieved.
In addition, quantitative trading or risk quantification, can also be made deeper.
above, is all exchanges contents of the interview with Mr. Products Group Founder director of risk control in Xuan Zhang.
In fact, in small series, the content of this interview has been full of dry goods, there is a lot to learn, but to Mr. Zhang Xuan opinion, then there are a lot of problems could not very well answer, due to time constraints,
I have a simple talk.
“Maybe next chat may be from a more macro perspective.” Mr. Zhang Xuan said, laughing at.
Perhaps, this “next time” will come very soon.
Chicago CME providers work together jointly organized “2017 China Enterprise Risk Management Forum” of Poker Finance, Founder Products Group has confirmed attendance.
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