What Is a Risk Retention Group?

Risk prevention and control is an important link in the process of enterprise management. In order to further improve employees' awareness of risk prevention and control.

Preventing and controlling risks

Right!

Risk prevention and control is an important link in the process of enterprise management. In order to further improve employees' awareness of risk prevention and control.

Chinese name

Preventing and controlling risks

Solid

Risks in the management process

Core

What organizational model, organization structure, etc.

Method

Risk avoidance, loss control, etc.

Group management and control has always been a management problem for large group companies. Due to the large scale and scale of large enterprises, it is easy to appear "big enterprise diseases" during operation. The efficiency of internal communication and resource utilization is not high enough to break through the scale wall. The company's headquarters continued to achieve rapid growth, and the group headquarters loved and hated the subsidiaries, hoping that the subsidiaries would play an active role and fear that the subsidiaries would lose control, so they kept repeating the process of centralization and decentralization and lost opportunities.

As a macro management issue, the group enterprise management and control system contains a lot of content and considerations, but each content and sub-issues are both interrelated and have their own relatively independent systems. Based on long-term project experience, management research and practice summary, Rendac Management Consulting Company has refined a set of processes and methodologies for the group's management and control system.

The group's management and control mainly solves four core and key issues:

Which organizational model to choose

How to design an organizational structure

How to standardize the accountability system and core management processes

How to implement a performance evaluation system.

2. Risk prevention or control

Risk control means that the risk manager adopts various measures and methods to eliminate or reduce the various possibilities of risk events, or reduce the losses caused by risk events.

Method of risk control

Risk aversion, loss control, risk transfer and risk retention.

1. Risk avoidance Risk avoidance is the intentional abandonment of risky behavior by investment entities to completely avoid specific loss risks. Simple risk aversion is the most negative way to deal with risk, because investors often give up potential target returns when they give up risky behaviors. So this method is generally only used in the following situations:

(1) Investment entities are extremely averse to risk.

(2) There are other solutions that can achieve the same goal, and the risks are lower.

(3) The investment entity is unable to eliminate or transfer risks.

(4) The investment entity is unable to bear the risk, or the risk is not adequately compensated.

2. Loss control Loss control is not to abandon the risk, but to make plans and take measures to reduce the possibility of loss or reduce actual losses. The stages of control include 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.

3. Risk transfer Risk transfer refers to the act of transferring the risk of the assignor to the assignee through the contract. The risk transfer process can sometimes greatly reduce the risk of economic entities. The main forms of risk transfer are contracts and insurance. (1) Contract transfer. By signing a contract, some or all of the risk can be transferred to one or more other participants. (2) Insurance transfer. Insurance is the most widely used method of risk transfer.

4. Risk retention Risk retention refers to risk taking. In other words, if a loss occurs, the economic entity will pay with any funds available at the time. Risk retention includes unplanned retention and planned self-insurance. (1) No plan to keep it. Refers to payment from income after a risk loss occurs, that is, not to make funding arrangements before the loss. When economic entities are unaware of the risks and believe that losses will not occur, or when the maximum possible losses associated with the risks are significantly underestimated, they will adopt unplanned retention to bear the risks. Generally, unfunded reservations should be used with caution, because if the actual total loss is much larger than the expected loss, it will cause difficulties in capital turnover. (2) Planned self-insurance. Refers to making various financial arrangements to ensure that funds can be obtained in time to compensate for losses before they occur. Planned self-insurance is mainly achieved by establishing a risk reserve fund.

Short for internal control. Refers to the internal control operation of a general company.

The Ministry of Finance of the People's Republic of China has defined the following internal accounting control: Internal accounting control refers to a series of measures formulated and implemented by the unit in order to improve the quality of accounting information, protect the safety and integrity of assets, and ensure the implementation of relevant laws, regulations and rules Control methods, measures and procedures.