What are the classifications of financial risks and what are the main types of financial risks?

Financial risks can be roughly divided into 8 types, which can be divided into credit risk, market risk (including exchange rate risk, interest rate risk and investment risk), liquidity risk, operational risk, legal risk and compliance risk, country risk, and reputation risk.

According to the perception of risk by market players, it can be divided into: subjective risk and objective risk; According to whether financial risks can be diversified, they can be divided into: systemic risk and non-systematic risk.

Let's take a closer look.

1. Credit risk.

Credit risk in the narrow sense: the risk of economic loss due to the counterparty's inability to perform the contract, i.e., the risk of default.

Credit risk in a broad sense: due to the impact of various uncertainties on the credit of financial institutions, the actual income results of financial institutions deviate from the expected goals, resulting in the possibility that financial institutions may suffer losses or obtain additional income in business activities.

2. Market risk.

Narrow market risk: The loss that a financial institution's trading position in the financial market may suffer due to adverse changes in market** factors.

Broad market risk: The possible gain or loss of a financial institution's trading position in the financial market due to changes in market factors. Broad market risk fully considers that the market may change in its favor and unfavorable direction, which may bring potential gains or losses.

3. Liquidity risk.

In 2015, the China Banking Regulatory Commission (CBRC) issued the Measures for the Management of Liquidity Risk of Commercial Banks (for Trial Implementation), which defines liquidity risk as the risk that a commercial bank is unable to obtain sufficient funds in a timely manner at a reasonable cost to repay due debts, fulfill other payment obligations and meet other capital needs for normal business operations.

Fourth, operational risks.

Operational risk in the narrow sense: the possibility that the operation department of a financial institution may suffer economic losses due to the lack or negligence of internal control, system errors, etc. in the course of operation.

Operational risk in the broad sense: all risks other than credit risk and market risk of financial institutions.

5. Legal risks and compliance risks.

Legal risk: A special operational risk, which refers to the possibility that a financial institution may suffer economic losses as a result of the possibility that the contracts and other documents signed between the financial institution and its employees or customers violate the relevant laws or regulations, or the relevant terms are not legally enforceable, or that it fails to properly perform its legal or regulatory duties to the customer.

Compliance risk: The risk that the bank may be subject to legal sanctions or regulatory penalties, significant financial losses or reputational damage due to its failure to comply with laws, regulatory provisions, rules, relevant guidelines formulated by self-regulatory organizations, and codes of conduct applicable to the bank's own business activities.

6. Country risk.

Country risk refers to the risk that an economic entity will suffer losses due to changes in the economic, political and social aspects of other countries when it conducts international economic, trade and financial exchanges with non-domestic counterparties.

7. Reputational risk.

Reputational risk refers to the possibility that financial institutions may suffer corresponding economic losses due to the loss of customers, shareholders, business opportunities, and business costs due to negative evaluation by the public.

Financial risk refers to the risks related to finance, such as financial market risk, financial product risk, financial institution risk, etc.

1) Market risk, which is the risk of changes in the value of assets of financial participants due to fluctuations in market factors such as interest rates, exchange rates, stock prices, and commodities. The impact of these market factors on financial participants may be direct or indirect through their competitors, traders or consumers.

2) Credit risk, which is the possibility of loss due to default (inability to repay or failure to repay on time) by the borrower or market counterparty. Almost all financial transactions involve credit risk: in addition to the traditional financial debt and payment risk, in recent years, with the growing growth of the online financial market (such as online banking, online supermarket, etc.), the credit risk problem of online finance has also become prominent.

3) Liquidity risk, which is the risk of possible losses for financial participants due to the reduced liquidity of assets. Liquidity risk occurs when financial participants are unable to liquidate their assets, or to mitigate assets as cash equivalents to repay their debts.

4) Operational risk, which is the possibility of potential losses for financial participants due to imperfect trading systems, management errors or other human errors of financial institutions. At present, the research and management of operational risk is receiving increasing attention: from a qualitative point of view, various organizations not only strive to improve internal control methods to reduce the possibility of operational risk; On the quantitative side, they also introduce well-established theories from other disciplines, such as operations research methods, into the sophisticated management of operational risk.

Hello, financial risks mainly include credit risk, market risk, liquidity risk, operational risk, etc. Credit risk refers to the risk that the debtor or counterparty fails to perform its obligations under the contract or the credit quality changes, affecting the value of the financial product, thereby causing economic losses to creditors or financial product holders. Market risk refers to the risk of unanticipated potential loss of value due to changes in the market, interest rates, exchange rates, etc.

Liquidity risk refers to the risk of not being able to complete a trade at the desired time due to insufficient market volume or a lack of counterparties willing to trade. Operational risk refers to the risk of loss caused by inadequate or faulty internal procedures, employees, IT systems, and external events.

There will be different understandings or different concerns about the types of financial risks from different perspectives.

For financiers, financial risk refers to the risk of economic losses caused by the business activities they engage in. Such risks mainly include interest rate risk, foreign exchange risk and management risk, especially credit risk.

Interest rate risk refers to the possibility of losses due to the difference between the expected level of interest rates and the level of the actual market interest rate at maturity. Foreign exchange risk refers to the possibility of loss or loss of expected benefits due to changes in exchange rates. The so-called management risk refers to the possibility of losses caused by the poor management of financial institutions or operators.

The so-called credit risk.

Also known as credit risk, it refers to the possibility that the debtor will not be able to repay the principal and interest of the debt on time, causing the creditor to suffer certain economic losses.

The types of financial risks are subdivided into several types:

1.Market Risk. 2.

Credit Risk. It refers to the default constituted by the counterparty's failure to perform its debts when due or its voluntary and inability to perform the terms of the contract, also known as the risk of default. 3.

Liquidity Risk, Operational Risk4Industry Risk. 5.

Legal, regulatory, or policy risks. 6.Personnel Risks.

7.Risk of natural disasters or other emergencies. 8.

Investment Risk. 9.Political risk.

Further information: Finance refers to the economic activities in which banks, ** or insurance companies raise funds from market entities and lend money to other market entities in economic life.

Broadly speaking, all capital flows generated by market entities such as **, individuals, and organizations through the raising, allocation and use of funds can be called finance. Therefore, not only the financial industry, but also the finances of the industry, the behavior of industry enterprises, and personal financial management are all part of finance. Finance can be regarded as three types of economic behaviors: fundraising allocation (fundraising), investment and financing (borrowing money to buy stocks).

Basic meaning. The essence of finance is the circulation of value. There are many types of financial products, including banks, insurance, trusts, etc.

Finance involves a wide range of academic fields, including accounting, finance, investment, banking, insurance, trust and so on.

Constituent elements. There are five elements of finance:

1. Financial object: currency (capital). The currency circulation regulated by the monetary system has the nature of advance, turnover and value-added;

2. Financial methods: represented by credit methods based on lending. The objects of transactions in the financial market are generally written proof of credit relationship, contractual documents of creditor's rights and debts, etc.;

Including direct financing: no intermediaries involved; Indirect financing: Finance through the intermediary role of intermediaries.

3. Financial institutions: usually divided into banks and non-bank financial institutions;

4. Financial venues: financial markets, including capital markets, money markets, foreign exchange markets, insurance markets, derivative financial instrument markets, etc.;

5. System and regulation mechanism: supervise and regulate financial activities.

The relationship between the elements: Generally speaking, the elements are relatively independent and interrelated, with financial objects and financial venues being the hardware elements of the financial system, financial methods, systems and regulatory mechanisms being the software elements of the financial system, and financial institutions being the comprehensive elements.

Specifically, financial activities generally use credit instruments as the carrier, and through the trading of credit instruments, they play a role in the financial market to realize the transfer of the right to use monetary funds, and the financial system and regulatory mechanism play a supervisory and regulatory role in it.

According to the manifestation of financial risk, financial risk can be divided into credit risk, liquidity risk, interest rate risk, exchange rate risk, operational risk, policy risk, legal risk and country risk.

According to the level of financial risk, financial risk can be divided into micro financial risk and macro financial risk. Although micro-financial risks are based on micro-economic entities, their accumulation to a certain extent will have a negative impact on macro-finance and the economy, and will further spread into macro-financial risks. Macro-financial risk is the risk to the country, the economy as a whole, and the financial system as a whole.

Macro-financial risks also have an impact on the micro-finance sector.

According to the main body of financial risk, financial risk can be divided into national financial risk and economic entity financial risk. The former refers to taking financial risks in the capacity of a country. The latter refers to financial risks with microeconomic agents as risk bearers.

The latter can be subdivided into financial institution risk, corporate financial risk, resident financial risk and financial risk. The ** here is to bear financial risks as a micro subject.

According to the nature of financial risks, financial risks can be divided into systemic financial risks and unsystematic financial risks. The former refers to the financial risks and systemic financial turmoil faced by all participants in an economy due to the influence of global factors. Systemic financial risks can be manifested as cyclical financial risks and structural financial risks.

At present, China's commercial banks mostly adopt the mode of giving customers a comprehensive credit line to determine the financing line. However, the determination of the comprehensive credit line of China's commercial banks is relatively arbitrary and scientific, resulting in the phenomenon of multiple credit extensions, which is easy to concentrate on "large households" and the risk of excessive credit. How to reduce the risk of excessive credit extension brought by long credit to commercial banks, so that commercial banks can be more scientific and reasonable when granting credit lines to customers, and better match the actual capital needs of customers, the author suggests that the following aspects can be considered:

1. Optimize the external environment for credit management1Improve the inter-bank credit reporting management system, and actively maintain the social creditworthiness environment. At present, under the condition that China's credit system is not perfect, inaccurate and asymmetric information will cause errors in bank credit work.

Commercial banks can often only inquire about the customer's credit balance and asset classification during the credit review, and it is difficult to inquire about the current customer's effective credit line in each bank, and it is even more difficult to use the customer's future credit, and it is difficult to control the total amount of customer credit, or it can only be controlled afterwards, and it is difficult to achieve the effect by setting credit conditions to restrict.

First, the structural imbalance concentrates the risk.

Due to the lagging development of China's capital market and small and medium-sized financial institutions, state-owned banks have long been in an absolute dominant position in the allocation of funds. On the one hand, the lack of effective investment channels other than depositing money in banks, coupled with the cautious expectations brought about by education, health care and social security reforms, has led to a continuous increase in the marginal savings rate and a high savings rate for residents.

Second, financial and fiscal risks are amplified.

In the process of gradual reform, the risk isolation mechanism between finance and finance has not been established. On the one hand, financial risks are shifting to fiscal. Due to the lack of institutional norms, the central bank's use of funds has an obvious tendency to be financialized, and it is difficult to recover huge reloans.

On the other hand, fiscal risk transforms into financial risk.

Third, the huge amount of informal finance has become a hidden danger.

For many years, SMEs have struggled to raise development funds from formal financial channels and have been forced to seek informal financial channels. The size of informal finance in China is estimated to be close to 1 3 of formal finance.

Fourth, the risks in the transformation of the mechanism are prominent.

The banking sector is risky and asset quality is generally worrisome. Lack of competition in China's banking industry, weak corporate governance, poor business innovation ability, and widespread financial risks. Secondly, the industry implies huge financial risks.

The company's income structure is unreasonable, the asset quality is not high, the liquidity is obviously insufficient, the cumulative risk is serious, and a number of ** companies have been in a serious insolvency situation.

Fifth, the effectiveness of capital controls has weakened.

The effectiveness of capital sales disturbance project control has been seriously weakened, resulting in large-scale abnormal capital flows. First, the rent-seeking inflow of fake foreign capital. Since 2001, net capital inflows have grown exponentially.

6. Losses of the RMB exchange rate mechanism.

The shortcomings of the RMB exchange rate mechanism have led to the unsustainable development dilemma of China's traditional opening-up model and policy, and further caused many outstanding problems.