Risk management plays an important role in the value management of commercial banks
- First, stabilize risk expectations. The risk prevention and control strategies of commercial banks always face two issues: first, at the macro level, joint efforts of the government, regulatory authorities and commercial banks are required to prevent and defuse risks, and the role of micro and technical means is limited. The other is the meso (middle) and micro levels, which are closely related to the corporate governance structure, market positioning, development goals, promotion strategies and incentive and restraint mechanisms of banks.
- Second, accurately measure risk. A bank is mainly engaged in risk-based business, and risks cannot be avoided during operation. The bank's risk management strategy is premised on tolerating moderate risk. Due to difference in capital strength, management mechanisms, operating environment and market positioning of each bank, the risk management preferences will be different. Regardless of these preferences, the principle of full coverage of risks should be reflected in the end, the value of bank capital must be maintained and increased. It is necessary to protect the investment safety of bank creditors and to maintain the safe operation of the virtuous cycle system of "borrowing and returning" bank funds.
- Third, control risks throughout the whole process. With the emergence of the mixed operation pattern of banks, the risk categories and supervision of banks are becoming more and more complicated. In addition to high credit risks, market risks, legal risks and operational risks are accumulating. The function of the risk prevention and control system established for this purpose is to extend the bank risk management to all business areas, without leaving any area untouched. Risk classification and measurement should be carried out for all businesses and products that may generate risks, and supervision, control and disposal should be conducted through the establishment of risk control links.
The role of market management the value management of commercial banks
The regional market is mainly divided according to administrative divisions or certain boundaries. Major distinctions include domestic and overseas markets. Administrative divisions are divided into provincial, prefectural, and county-level markets. With the formation of economic centers, cross-regional markets have emerged. The systematically important banks in China generally delimit the market scope by level according to the administrative division.
Systemic markets usually forms a market chain dominated by relatively strong investment subjects and leading enterprises in the industry, such as financial institutions, railways, posts and telecommunications, telecommunications, electric power, oil, medical care, military, social security and other industries or enterprises and institutions. These types of enterprises generally need funds collection, settlement, system credit granting, and industry chain enterprise finance linkages. With large market intensity, strong negotiation ability and high comprehensive rate of return, they are bound to be the focus of bank competition. Comparatively speaking, systemically important banks have the advantage, and there will be fierce competition among systemically important banks. In some regions and some industry chains, localized banks can also occupy a greater share of financing.
Mixed markets involve the interweaving of regional and systemic markets. The competition and cooperation between systemically important banks and local banks may be more integrated, and the more developed the region, the more prominent the performance. For example, cooperation between banks and the insurance and securities industries; competition and cooperation among banks, competition and cooperation between banks and non-bank financial institutions, cooperation between banks and government institutions, etc.
The role of human capital management in the value management of commercial banks
The effectiveness of personnel management in organizations. Bank institutional management involves the institutional level, the number of institutions and institutional effectiveness. The institutional level is closely related to the system of commercial banks. In the case of the four major banks, such as the Industrial, Agricultural, China and Construction banks, they are generally consistent with the administrative levels of the government, divided into four levels, and some even divided into five levels. Other commercial banks are generally divided into three levels, namely, headquarters, central city, and subordinate business organizations. The more tiers, the longer the chain, the more information and efficiency is likely to decline, and the greater the management cost. The current trend of reform is to reduce hierarchy, improve efficiency, and achieve matrix management. The direction is centralization of authorization, centralization of operations and centralization of data so that different functions are professionalized, smarter and simplified, across levels, in order to be more efficient and reduce risk
Effectiveness of the compensation system. In the bank management expense, the expense on personnel takes the largest share and generally accounts for 40-60% of bank management expenses. The function of salary system is to stabilize and unite employees and reflect their basic job value. In the salary structure of employees, the proportion of living salary and fixed salary needs to be balanced. In particular, front-line employees are generally more sensitive to the compression and adjustment of fixed wages. Fixed wages cover the basic cost of employees' daily life and needs to be kept stable and moderately increased to maintain their basic living needs. The second is to give play to the incentive or constraint role of value creation, and to establish a reward feedback mechanism corresponding to the organizations, teams. and personnel with outstanding contributions. On the other hand, the income should be adjusted in time and the pressure of appraisal should be increased for the continuously declining performance. The third is the incentive effect on managers. It is difficult to use short-term quantitative performance assessment or evaluation for managers' contributions.