"These market risks cannot be avoided through internal management of enterprises. Financial risk management is needed to counter the external market and hedge this risk. This is a very important thing for corporate CFOs to do. " Li Fuan, director of the Business Innovation Supervision and Cooperation Department of China Banking Regulatory Commission, said at the 2009 China International Financial Managers Forum.
It is generally believed that the outbreak of the financial crisis is the necessity of the development of the economic cycle, and in 2005 and 2006, there was already excess liquidity in the market.
"At that time, the prices of raw materials needed for the production of our enterprises rose in an all-round way, but the prices of many things were falling when they were sold internationally. This is actually a comprehensive signal." Li Fuan said.
However, how many enterprises, especially private enterprises, can carry out risk early warning? After the financial crisis broke out in 2008, CFOs gradually realized that the market risk management of enterprises was an unavoidable problem.
Small and medium-sized enterprises talk about risk management
"As far as I know, more than 98% of the Fortune 500 companies have special risk management teams, while China enterprises may not have risk management teams even if they enter the Fortune 500." Li Fuan pointed this out.
This fact is shocking! If China is among the top 500 enterprises in the world, let alone small and medium-sized enterprises! "The way for SMEs in China to fight against market risks is very old, mainly by adjusting inventory or controlling costs. This is not an effective way to manage risks at all." Li Fuan said.
Li Fuan also said that he had visited a screw manufacturing enterprise in Zhejiang, whose main raw material was steel. As we all know, steel prices have fluctuated greatly in recent years. Although this enterprise is not a well-known big company, its screw production standard has been upgraded to an international standard because of its focus on screw production and technical Excellence.
This is a valuable private enterprise, but in the current economic turmoil, the biggest risk it faces is not production, technology or research and development, but whether it can manage the market risk under this turbulent condition well.
However, the two generations of managers of this enterprise have different control concepts on this market risk. Parents' managers believe that there will always be fluctuations in the market, and what operators should do is to manage production in a down-to-earth manner; Although my son didn't study risk management and didn't analyze and study the price of steel market, in order to control this market risk, he has started to do electronic futures trading in Shanghai steel market.
"In fact, China enterprises have not realized how to manage the risk of market fluctuation in the current market." Li Fuan said.
However, from the reality of enterprises, it is unrealistic to establish a professional risk management team within enterprises, especially for private enterprises. When survival and adventure coexist, almost all enterprises will choose the former.
Using third-party consulting organizations
"The CFO of our company should know this risk, manage this risk and trade this risk in the right way. The best way is to outsource or ask a professional organization to be a consultant. " Li Fuan suggested.
However, as far as the current situation is concerned, there are still few companies in China that can provide this kind of professional consultation. Therefore, in addition to these two ways, Li Fuan has been promoting the introduction of banks and professional financial institutions in Zhejiang to help enterprises manage these risks.
In fact, this means letting financial institutions manage market risk, and the most difficult thing for banks to manage is market risk, because the losses and profits caused by market price fluctuations also have the highest technical requirements. However, in financial institutions, because there are systematic and professional teams and very strict systems to manage this risk, they will control this risk much more professionally than enterprises.
"China enterprises, especially those with relatively high risks, need at least 8 years to 10 years to have the ability to manage risks." Li Fuan said.
It can be seen that it is of great significance for enterprises to use third-party management consulting institutions to guard against market risks.