Management strategy for market risks Financial institutions must face interest rate risks when maintaining appropriate positions and trading with interest-sensitive financial instruments (for example, changes in interest rate level or volatility, the length of prepayment period of mortgage loans and credit differences between corporate bonds and emerging markets may all bring risks); Market makers in foreign exchange and foreign exchange options markets may face foreign exchange risks when maintaining certain foreign exchange positions, and so on. In the whole risk management framework, the Market Risk Management Department, as the executive department under the Risk Management Committee, is fully responsible for the market risk control of the whole company and reports directly to the CEO. The Ministry has several international offices in key business areas, all of which implement matrix responsibility system. In addition to reporting to the Global Risk Manager, they also report to the local non-transaction management department at the next higher level.

The Market Risk Management Department is responsible for writing and submitting risk reports, and formulating and implementing the company-wide market risk management program. The risk management outline distributes the risk limits approved by the Risk Management Committee to all business units and trading counters, and evaluates, supervises and manages the implementation as a reference; At the same time, report the special exemption of the risk restriction exception, and confirm and publish the relevant regulatory provisions of the management organ. The risk management outline provides a clear framework for financial institutions' risk management decision-making.

The Market Risk Management Department regularly conducts risk assessment for each business unit. Under the leadership of the Global Risk Manager, the whole risk assessment process is jointly completed by the Market Risk Management Department, senior traders and risk managers of various business units. Due to the participation of other senior traders, risk assessment itself provides guidance for the company's risk management model and method.

In order to correctly evaluate various market risks, the market risk management department needs to confirm and measure various market risk exposures. The market risk measurement of financial institutions begins with the confirmation of relevant market risk factors, which varies from region to region and market. For example, in the fixed income securities market, risk factors include interest rate, yield curve slope, credit difference and interest rate fluctuation; In the stock market, risk factors include stock index exposure, stock price fluctuation and stock index difference; In the foreign exchange market, the risk factors are mainly exchange rate and exchange rate fluctuation; For commodity market, risk factors include price level, price difference and price fluctuation. Financial institutions should not only confirm the risk factors of a specific transaction, but also determine the relevant risk factors as a whole.

The Market Risk Management Department is not only responsible for measuring and evaluating various market risk exposures, but also for formulating standards and methods for risk identification and evaluation, and submitting them to the Global Risk Manager for approval. The methods to confirm and measure risks are: VAR analysis, stress analysis and scenario analysis.

According to the confirmed and measured risk exposures, the market risk management department sets risk limits for them respectively, and the risk limits change with the change of trading level. At the same time, the market risk management department cooperates with the financial department to set appropriate limits for each business department. By consulting the senior risk manager, the market risk management department strives to make these limits consistent with the company's overall risk management objectives.

For more information about project/service/procurement bidding, and to improve the winning rate, please click on the bottom of official website Customer Service for free consultation:/#/? source=bdzd