Risk Control Management

The enterprise’s value and core competitiveness is shown through its capability in risk management. The bond market environment where the credit rating industry is situated in has gradually become complexed. The total volume of bond issued has increased every year with constantly enriched varieties. Meanwhile, since the risk events continuously occur, supervision departments and related self-discipline organizations has issued various policies, regulations and self-discipline rules, constantly strengthening the regulation of credit rating agencies. The key of Dagong’s international risk control system is to establish a functioning corporate governance structure, strict authorization and accountability mechanisms, effectively balanced organization structure, rigorous risk management system, and an incentive and restraint mechanism.

1. Dagong strengthens the education mechanism of risk management concept and raises the awareness of every member to participate in the risk management, which provides a solid foundation for the comprehensive risk management system.

2. Dagong has developed and formed the ability to foresee risks. It has built the all-personnel risk early-warning mechanism from bottom to top and explored an express report channel for risk information, which enables the Risk Management Committee to get hold of the risk information in time, work out the coping strategy and organize its implementation, so as to gain the initiatives and reduce the probability of risk occurring and the degree of possible unfavorable consequences.

3. Dagong controls risk from three aspects - risk recognition, risk assessment and risk response. It recognizes the risk source during daily management and business operation and at the same time analyzes its causes and potential consequences to form a risk database. By adopting qualitative and quantitative methods, Dagong analyzes and sorts the recognized risks to decide the grade of the risk according to its possibility and influence degree. According to the results of risk assessment, Dagong chooses the corresponding risk coping strategy and specific method to generate a solution and organizes its implement, thus fundamentally control the risk.

4. Through modifying inner control system, Dagong strengthens the restraining power of key departments and key positions, removing the hidden obstacles that could lead to risks at its source.

5. Dagong implements the accountability mechanism of risk management to define the responsibilities of risk management of various units, departments and positions. Through increasing their sense of responsibility, it would raise their enthusiasm and encourage their creativity.

6. Dagong has established the risk compensation fund to increase the enterprise’s risk tolerance capability, which provides economic guarantee for the effective operation of risk management system.

7. Dagong has established the quality evaluation system integrated with rating projects. Dagong’s quality evaluation system is a monitoring and assessing system that goes on simultaneously with the rating business. The quality evaluation results are released periodically. A minimum passing criteria is set up during the process, which is regarded as the evaluating basis for rating participants and departments in the business assessments, ensuring the overall quality of ratings.

8. Dagong has established the digital rating information management system. It utilizes information technology to recreate an information management platform that could adapt to ratings of various products. Through standardizing the index of analysis and decision models as well as system programming of the rating process, it would reduce the influence of human factors on ratings to the maximum.

9. Strengthen the internal and external supervision mechanism of assessment; besides the supervision within the assessment committee, Dagong has strengthened supervision outside the committee and formed two appealing channels: the first is appealing to the two institutions - Credit Assessment Committee or Specialized Assessment Committee; the second is appealing through Dagong Appealing Committee. As a public service agency, Dagong Appealing Committee seeks and accepts supervision and complains towards Dagong’s rating widely from the public, through unified service calls, emails, publishing questionnaires on the publications; it also carries out independent investigation on the complains, which extends the fair, just and open supervision towards Dagong rating to the whole society.