What Is Industry Risk Analysis?

Industry risk analysis is a technical term that can analyze the market risks existing in various industries to understand the prospects and credibility of the industry. Industry risk analysis mainly understands the basic status and development trend of the entire industry through cost structure analysis, industry maturity analysis, industry contemporaneity analysis, industry profitability analysis, industry dependency analysis, product potential analysis, and legal and policy environment analysis.

Industry risk analysis

Industry risk analysis is

Depending on the rating object, the focus of the industry risk analysis is also different.

1) Industry risk assessment

According to the industry risk assessment system,

In all industries, after an industry risk analysis, a quantitative credit risk rating should be performed.

use

1. Through industry risk analysis, reveal the development rules of various industries. Banks can be sure when they grant credit to an industry.

2. Through industry risk analysis, customers' risks in the industry can be avoided in advance. The long-term development trend of the industry and enterprises can be grasped through analysis of the industry's development trends, corporate competitiveness and product market space. By analyzing the trajectory of the development of the industry with the economic cycle, it is possible to grasp the potential risks and related reasons for the risks in the industry, such as market risks, structural risks (raw materials, concentration adjustment), environmental protection, and policy risks.

3. The analysis of industry risks can further improve the level of bank credit risk analysis. Through industry analysis, determine the industry development trend, the overall level of competition and the level of difference between the company and the product market space, and grasp the overall industry financial and ratio standards and differences, so as to promote the quality of a company's financial analysis and cash flow forecast To make more accurate customer ratings and project evaluation conclusions; at the same time, it can further clarify the realizing ability of corporate assets in the industry, provide a value basis for realizing mortgages, and give accurate judgments to non-performing loan customers to determine their customers' advances and withdrawals value.

4. Promote the development of bank credit strategies through industry risk analysis. The bank can scientifically and objectively determine the corporate strategic group based on the results of the industry risk analysis, and correspondingly determine the customer groups of different levels such as high-quality, maintenance, and exit, with financial products that implement different credit policies and different credit conditions, and determine the bank Industry market share, term, currency, high and low interest rate allocation, etc.

5. Through industry risk analysis, it is beneficial for banks to apply different credit analysis focuses and methods and risk aversion measures according to the differences between industries. We can determine the total amount of supply and demand based on the development stage of the industry, product characteristics, added value, technology development trends, product life cycle changes, and product market sales radius, etc., to accurately predict industry development trends, product market space, Analysis of corporate competitiveness, analysis of inter-industry correlations and characteristics, and reasonable determination of evaluation priorities.

To sum up, industry credit risk research can help banks grasp the basic laws of industry development, fully identify the various types of credit risks latent in the industry, and then according to the differences between different industries, banks can adopt different credit policies and be able to identify different industries. Corporate strategic group to maximize bank profitability while avoiding risks to the maximum