Risk control means that risk managers take various measures and methods to eliminate or reduce the possibility of risk events, or risk controllers reduce the losses caused by risk events. There are always some things that cannot be controlled, and risks always exist. As managers, they will take various measures to reduce the possibility of risk events, or control the possible losses within a certain range to avoid unbearable losses when risk events occur. The four basic methods of risk control are: risk avoidance, loss control, risk transfer and risk retention.
Chinese name
risk management
Foreign name
risk management
Inspection method
Risk avoidance, loss control, risk transfer, etc.
function
Reduce the losses caused by risk events.
definition
Risk control means that risk managers take various measures and methods to eliminate or reduce the possibility of risk events or reduce the losses caused by risk events.
way
risk control
The four basic methods of risk control are: risk avoidance, loss control, risk transfer and risk retention.
The core of finance is risk control.
risk aversion
Risk aversion means that investors consciously give up risk behavior and completely avoid specific loss risks. Simple risk aversion is one of the most negative risk management methods, because investors often give up potential target income while giving up risk behavior. Therefore, this method is generally only used in the following situations:
(1) Investors are extremely risk-averse.
(2) There are other schemes that can achieve the same goal with lower risk.
(3) Investors cannot eliminate or transfer risks.
(4) The investor cannot bear the risk, or the risk is not fully compensated.
Loss control
Loss control is not to give up risk, but to make plans and take measures to reduce the possibility of loss or actual loss. The stage of control includes three stages: before, during and after. The purpose of pre-control is mainly to reduce the probability of loss, and the control during and after the event is mainly to reduce the actual loss.
transfer of risks
Risk transfer refers to the act of transferring the transferor's risk to the transferee through the contract. The risk transfer process can sometimes greatly reduce the risk of economic entities. The main forms of risk transfer are contract and insurance.
(1) Contract transfer. By signing a contract, some or all risks can be transferred to one or more other participants.
(2) insurance transfer. Insurance is the most widely used way of risk transfer.
risk self retention
Risk retention means taking risks. In other words, if a loss occurs, the economic entity will pay it with any funds available at that time. Risk retention includes unplanned retention and planned self-protection.
(1) Unplanned reservation. Refers to the payment from the income after the risk loss occurs, that is, no financial arrangements are made before the loss occurs. When the economic subject is not aware of the risk and thinks that the loss will not happen, or when the maximum possible loss related to the risk is obviously underestimated, it will take unplanned reservation to bear the risk. Generally speaking, there is no need to use capital reserve carefully, because if the actual total loss is much greater than the expected loss, it will cause difficulties in capital turnover.
(2) protect yourself in a planned way. It means that before the possible loss occurs, various financial arrangements are made to ensure that the loss can be compensated in time. Planned self-insurance is mainly realized by establishing risk reserve.
situation
A "gamble"
A "gambling" is going on: if you guess the player, you can get 60 dollars; If you guess wrong, it's nothing.
"If it costs $20, who wants to buy this opportunity?" Burke Robinson asked questions.
This is a course of "Risk Management and Control" in Stanford University. Robinson on the podium is a consultant professor of management science and engineering at Stanford University, a world-class expert in decision-making, and a managing partner of the leading consulting firm StrategicDecisionsGroup. He has rich experience in making business and investment decisions by using the most advanced means.
Sitting under the stage are students from more than 30 countries who have traveled across the ocean to study here. Their brains are entering the tenth stage of decision-making-choice.
Previously, Robinson used coins to explain that decision trees can help realize "decision structure". As for the uncertainty faced by coins, we all know that the success rate is 50. Who wants to pay $20 for this investment opportunity when the coin turns into a pin pointing to a possible tendency?
Bet or not? In this rapidly changing world, it is a cruel "gamble" for enterprises to make choices about the uncertain future.
But no one thought that the first one took out $20 and put it in Robinson's hand; Xiang Xianquan, director of Zhejiang New Taizhou Law Firm, is a senior lawyer who handles economic disputes all the year round.
"Gambling on Thumbnails"
From the coin toss game to the "thumbtack" game, we need to clarify some basic essentials first.
If the maximum profit of playing coins is $60, then participants will face each other with an average profit of $30 according to a 50% probability. But this is only a statistical theoretical calculation, and in real life, unless you can call many times; Otherwise, he will get 60 dollars or nothing.
"Many investment decisions are one-off." Robinson said that this is the risk of the game and the meaning of decision-making. Decision-making is an unchangeable resource allocation. "It is a controllable behavior, but the development and result of events are uncontrollable."
However, the game of "coin toss" is still worth gambling, because compared with the expected value of $30, the participants may still get a return of "+10" at a cost of $20.
But when the investment opportunity changes from a coin to a thumbtack shaking in a cup, things are different. The first difference here is that some people think that the probability of needle direction is still 50%; Some people think that the probability of a certain direction is higher;
In this way, people may stand in three columns: the first column is people who have no idea about the orientation of thumbtacks, and their endings are the same as guessing the orientation of coins, with the probability of being right and wrong being 50% respectively; The second column is people who think the thumbtack is biased, but I don't know why.
Will things be different for them?
You can assume a strong bias first: the pointer is 80% upward; 20% down payment. Then, the probability of participants guessing upwards is 80% times 50% = 40%; The downward guess probability is 20% times 50%= 10%, that is, the guess probability is 50% (that is, 40%+ 10%). In other words, it doesn't matter whether the thumbtack is tilted or not, because the probability of being right or wrong is still 50%.
However, there is a third situation, that is, the subjects think they know what the needle tendency is. This is also the original intention of Xiang Xianquan to stand up and "participate in gambling".
When Robinson asked, "What do you think is the upward trend of the needle?" Answer to the lawyer: "80%."
The audience burst into laughter, but this answer just explains why he rushed so fast-if he thinks he knows where 80% of the needle is inclined, then 60 times 80%=48 dollars, and the expected return value of this opportunity is 48-20 (cost) =28 dollars.
According to this subjective probability+term, there are indeed many opportunities.