As a result of the world financial crisis, China is taking risk management seriously. The Chinese financial regulatory system has instituted testing for all workers in the financial sector, including risk managers, certified financial analysts and information security engineers. The workers are required to pass exams within one year, or lose their jobs.
“There are new sources of volatility that threaten our sound and stable growth,”
the China Banking Regulatory Commission said in a statement in October. “It is
important to recognize these new problems and make careful decisions to cope
with them.” (NYTimes.com, December 25, 2008) The new exams seem to be an effort to ensure that all financial sector workers are familiar with good practices in decision making under uncertainty.
It appears that China has not been affected as drastically as the West during the recent financial turmoil. While China owns a lot of real estate in foreign markets that have taken a hit, the total holdings are only a fraction of China’s wealth. Because Chinese banks are more cautious and more heavily regulated, they have managed to avoid the worst downturns. The financial sector is aiming to stay diversified, and it appears they may even be planning to enter new markets such as financial derivatives. Risk analysis is central to these efforts.
Perhaps the success in avoiding the worst of the market pitfalls has reinforced the historic tendency toward regulation in China. While many in Western markets are pointing to the U.S. Securities and Exchange Commission for its role in neglecting regulation, China is doubling up on its own regulation and adding risk assessment as a central part of the equation. In order to be most effective, Monte Carlo software such as @RISK should be a part of the new initiatives.
DMUU Training Team