WHAT ARE THE MAIN RISKS THAT A SECURITIES COMPANY MAY FACE? WHAT ARE THE MEASURES AVAILABLE TO HANDLE RISKS?

With the current global economic situation, the occurrence of risks in the stock markets is nothing new. So when bad changes in the market occur, what are the main risks that a Securities Company can face? Through today’s article, let’s join Pham Consult

1. What are the main risks that securities companies can face?

The main risks that securities companies may face are specified in Clause 2, Article 15 of the Regulations guiding the establishment and operation of risk management systems for securities companies issued together with Decision 105/ Decision-UBCK in 2013 is as follows:

Identify risks

1. Securities companies must stipulate in writing the risk determination process.
2. The main risks that securities companies can face are market risks, payment risks, liquidity risks, legal risks, operational risks, concentration risks and other risks according to the classification of each securities company.

Thus, according to regulations, the main risks that securities companies can face include:

(1) Market risks;

(2) Payment risk;

(3) Liquidity risk;

(4) Legal risks;

(5) Operational risks;

(6) Concentration risk;

(7) Other risks according to the classification of each securities company.

2. What are the necessary steps for a securities company to choose and implement risk treatment measures?

The necessary steps to select and implement risk treatment measures are specified in Clause 3, Article 19 of the Regulations guiding the establishment and operation of risk management systems for securities companies issued together. Decision 105/QD-UBCK in 2013 is as follows:

Risk handling

1. Securities companies must stipulate in writing the handling process for each risk that the securities company encounters.
2. After evaluating and summarizing risks, the securities company must apply appropriate measures to deal with the risks encountered.
3. Necessary steps to select and implement risk treatment measures:
4. a) Identify available response measures;
5. b) Evaluate the pros and cons of each treatment measure, including cost-benefit analysis and budget use analysis;
6. c) Develop a handling plan, including responsibility for implementing the plan, implementation progress, forecast results, planning and consideration of financial resources and assessment procedures;
7. d) Implement the treatment plan: After conducting risk treatment, if there are still unaccounted risks, the corresponding procedures must be repeated until the risk is within a reasonable level. Acceptable.

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Thus, according to regulations, the necessary steps for securities companies to select and implement risk treatment measures include:

(1) Identify available response measures;

(2) Evaluate the pros and cons of each treatment measure, including cost-benefit analysis and budget use analysis;

(3) Develop a treatment plan, including responsibility for implementing the plan, implementation schedule, forecast results, planning and review of financial resources and assessment procedures;

(4) Implement the treatment plan: After conducting risk treatment, if there are still unaccounted risks, the corresponding procedures must be repeated until the risk is within the level acceptable.

 

 

3. What measures are available for securities companies to handle risks?

Available measures to handle risks are specified in Clause 4, Article 19 of the Regulations guiding the establishment and operation of risk management systems for securities companies issued together with Decision 105/QD-UBCK 2013 as follows:

Risk handling

1. Securities companies must stipulate in writing the handling process for each risk that the securities company encounters.
2. After evaluating and summarizing risks, the securities company must apply appropriate measures to deal with the risks encountered.
3. Necessary steps to select and implement risk treatment measures:
4. a) Identify available response measures;
5. b) Evaluate the pros and cons of each treatment measure, including cost-benefit analysis and budget use analysis;
6. c) Develop a handling plan, including responsibility for implementing the plan, implementation progress, forecast results, planning and consideration of financial resources and assessment procedures;
7. d) Implement the treatment plan: After conducting risk treatment, if there are still unaccounted risks, the corresponding procedures must be repeated until the risk is within a reasonable level. Acceptable.
8. Available measures to handle risks are as follows:
9. a) Avoid risks: apply measures to avoid any activities that may cause risks;
10. b) Risk mitigation: applying measures to reduce the impact of risks or their likelihood of occurring;
11. c) Risk sharing: transferring all or part of the risk to another party;
12. d) Risk acceptance: there are no measures to change the probability and impact of the risk.

Thus, according to regulations, available measures for securities companies to handle risks include:

(1) Avoid risks: take measures to avoid any activities that may cause risks;

(2) Risk mitigation: applying measures to reduce the impact of risks or their likelihood of occurring;

(3) Risk sharing: transferring all or part of the risk to another party;

(4) Risk acceptance: there are no measures to change the probability and impact of the risk

 

Thus, through the article on Pham Consult, we have helped you learn more about the risks that Securities Companies may encounter. Hope this information will support your work.