Quản trị rủi ro tại quỹ đầu tư phát triển tỉnh bắc ninh tt tiếng anh

Secondly, the author agrees and shares Robert and Bob's risk management concept, they consider risk management in financial institutions including development investment funds as a compr

VIETNAM ACADEMY OF SOCIAL SCIENCES

GRADUATE ACADEMY OF SOCIAL SCIENCES

NGUYEN VIET GIANG

RISK MANAGEMENT OF BAC NINH DEVELOPMENT

INVESTMENT FUND

Major: Business Administration Code: 9340101

DOCTORAL DISSERTATION SUMMARY

OF BUSSINESS ADMINISTRATION

HANOI, 2020

The dissertation has been completed at GRADUATE ACADEMY OF SOCIAL SCIENCES

Supervisors:

1 Dr Nguyen Phuong Bac

2 Dr Nguyen Binh Giang

Reviewer 1: Assoc.Prof.Dr Le Thai Phong

This doctoral dissertation will be defended before the Council

of Examiners, at Graduate Academy Of Social Sciences At… on… 20

This doctoral dissertation can be found at:

National Library of Vietnam Library of Graduate Academy of Social Sciences

INTRODUCTION

1 The nessessary of research topic

In the context of the constant fluctuation of the domestic and foreign economic and political situation, the business activities of the Development Investment Funds currently contain many risks that administrators, researchers have to find solutions to prevent risks from causing great damage to the Fund's capital in particular and to the economy in general In fact, risk is undesirable for development investment funds and other financial institutions because of which there are responsibilities and damages in many aspects The concept and implications of risk management in development investment funds are not yet fully understood Therefore, the application of theory to solve practical problems of risk management in these funds is not scientific and feasible

In fact, in Vietnam, risk management is considered an important content in the business activities of development investment funds, but the organization of risk management has not met the requirements yet Structure, operating mechanism and implementation method are still inadequate, the number of officials in charge is small and the number of expertise is limited, so it is difficult to foresee the risks in the process of lending, investment and guarantee

Credit, investment and guarantee risks can also cause inflation or stagnation, especially when the investment does not create a value of goods corresponding to the amount of investment borrowed At that time, this risk can be complicated and cause unpredictable and significant consequences for investors Therefore, improving the efficiency of risk management, putting risks under control in the financial capacity of enterprises is the priority target of development investment funds

Bac Ninh Development Investment Fund is a fledgling financial institution (established in 2014), with risk management initially concerned but still facing many challenges They do not have an independent risk management apparatus; human resources are insufficient and weak in professional skills Everything is in the beginning stages It should be emphasized that the Fund has not yet developed a risk management plan at the request of corporate governance theory and the requirements of national standards (TCVN ISO 31000: 2011) on risk management For example, the problem of risk identification still has many shortcomings; measurement of

unqualified risks; risk management monitoring process is still limited; the implementation of risk review mechanism, management reporting regime is not timely Meanwhile, the business scope of the fund covers the whole area of Bac Ninh province It should be noted that for a province with a very high demand for credit, investment and guarantee, it requires an effective business plan, including risk management, to be able to meet it

Facing this fact, the PhD student selected the topic "Risk management

of Bac Ninh Development Investment Fund" to be a doctoral dissertation

In other words, the implementation of this project is extremely necessary, of great scientific and practical significance because it contributes to improving the quality of risk management, meeting the Fund's business requirements and of Bac Ninh province

2 Research purpose and tasks

2.1 Research purpose

The main research purpose of the dissertation is to propose solutions to improve risk management at the Bac Ninh Development Investment Fund, contributing to improving the business efficiency of the Fund

- Scope of space: operational risk management in the Bac Ninh Development Investment Fund

- Scope of content: the project is implemented by a combination of business operations of the Fund and risk management (focusing on three areas of loan, investment and credit guarantee)

4 New contributions to the science

Firstly, the author of the thesis affirmed the content of risk management

in the local development investment fund in our country because this fund functions as a business enterprise in the field of finance This content contributes to the diversity and interference of risk management in business administration activities

Secondly, the author agrees and shares Robert and Bob's risk management concept, they consider risk management in financial institutions including development investment funds as a comprehensive review and assessment of business activities to identify the potential risks ie risks The author of the thesis added that the aspect of risk management should be considered as a decision-making process to ensure safety as much as possible and take appropriate measures to deal with it to minimize the consequences

of the risk

And thirdly, the dissertation shares and adds a basic content in the internal meaning of risk management at the development investment fund That is building a risk management plan, considering this as the first stage, having a key position in the risk management process and then coming to identify risk This contributes to the theory of risk management in business operations of development investment funds and financial institutions

5 Theoretical and practical significance of the research

5.1 Theoretical significance

The dissertation contributes to systematize risk management theory in business activities of financial institutions, including Development Investment Funds

Contribute to interpret risk management according to the management process and operational activities of the business

5.2 Practical significance

Firstly, the thesis shows that in the business activities of development investment fund, the risk management should be seen as an integral part of the development strategy of this organization

Secondly, the thesis has pointed out the factors affecting risk management in both qualitative and quantitative aspects This contributes to helping risk managers to quantify the positive and opposite effects on business risk management

Thirdly, the most research results are the proposed solutions for Bac Ninh Development Investment Fund, which is not only practical for this Fund in improving business efficiency but also experience There is a reference value for other financial institutions including local Development Investment Funds in our country

6 The structure of the dissertation

In addition to the introduction, conclusion, references and appendices, the research content of the topic consists of five chapters: Chapter 1: Overview of the studies related to the dissertation topic Chapter 2: Theoretical and practical basis for risk management in development investment funds

Chapter 3: Characteristics of the study area and research methods Chapter 4: Current situation of risk management of Bac Ninh Development Investment Fund

Chapter 5: Development strategy and solutions to improve risk management at the Bac Ninh Development Investment Fund

1.1 Domestic studies

So far, there have been some studies on risk management issues in

Vietnam In terms of risk and crisis management, there is work of Dang

Duc Thanh "Risk management" in 2016; Doan Thi Hong Van, Kim Ngoc Dat, Ha Duc Son "Managing risk and crisis" in 2015; "Risk management in enterprises" by Nguyen Thi Quy in 2008; " Managing financial risks" by Nguyen Minh Kieu in 2012; Nguyen Thi Ngoc Trang, Ho Quoc Tuan, Nguyen Khac Quoc Bao, Tran Ngoc Tho "Financial risk governance" in

2013; "Risk management in banking business" by Nguyen Van Tien in

2010, Hoang Xuan Phong "Market risk management at Vietnam Joint Stock Commercial Bank for Industry and Trade" in 2014, Duong Ngoc Hao "Mechanical solution version to improve credit risk management at Vietnamese commercial banks” in 2015, Nguyen Quang Hien “Credit risk management at Military Commercial Joint Stock Bank” in 2016, Ta Dinh Long “Lifting improve credit risk management capacity at Vietnam Bank

for Agriculture and Rural Development” in 2016 In term of evaluation

criteria system for the management, there is the doctoral dissertation

"Building a system of evaluation criteria for the management of the State

Treasury's budget fund" by Phan Quang Thong in 2015 In term of fund risk

management and experience, there is Doan Huu Tue's research "Improving

the organization and operation of the Vietnam People's Credit Fund system"

in 2010; Nguyen Dinh Luu "Improving and developing the Vietnam People's Credit Fund system" in 2008; Tran Quang Khanh "Solutions to ensure safety for the operation of the Vietnam People's Credit Fund system"

in 2003; doctoral dissertation "Solutions to improve the operational efficiency

of local development investment funds in Vietnam today" by Pham Phan Dung

in 2008; Ministry-level Scientific Research Project "Venture capital fund and the ability to form and develop in Vietnam" by the Center for Scientific Research and Investment in 2003

These studies have focused on analyzing and clarifying risk management in business operations of enterprises, including risks in business strategy, credit, corporate finance; building theoretical framework

of crisis and risk, the relationship between them; business leadership and role in risk management; solutions to deal with risks that financial institutions and businesses in the world often use These are basic theoretical issues on risk management

1.2 Foreign studies

There are some of the overseas studies on risk management

The issue of risk theory and risk management is mentioned in detail

in “Fundamentals of Risk Management: Understanding, Evaluating and Implementing Effective Risk Management” by Paul Hopkin in 2012; “Risk Management and Financial Institution” by John C Hull in 2012; Jonathan Reuvid “business risk management” in 2014; “Certified Investment Fund Governance: Developing a Risk-Based Oversight Framework” Report of

Certified Investment Fund Director Institute in 2015; “Risk management in banking” by Joel Bessis in 2015; “Managing fund liquidity risk in Europe” by the European Capital Markets International Association in 2016; “The Social Enterprise Development and Investment Funds Lessons from the implementation process,” 2013 Australia Department of Education, Human Resources and Office Relations; "Risk Management Implications of Mutual Fund Investment Objective Classifications" by Larry J Prather in 2012; "Risk Management Issues in European Equity Funds" by Andrew Clare1, Miguel Corte-Real, Natasa Todorovic in 2012;

"Challenges and issues faced by Indian Mutual Fund Industry" by Naila Iqbal, 2011; “Political Risk - An Important Issue for Sovereign Wealth Funds, by David A Glancy, 2012; "Agricultural investment funds for developing countries" of the United Nations Food and Agriculture Organization, 2010; “How Pension Funds Manage Investment Risks: A Global Survey, by Sandy Halim, Terrie Miller, and David Dupont, 2010;

"Managing Investment Risk in Defined Benefit Pension Funds", by Franzen, D., 2010; “Hedge Fund Investments: Risk Management Perspectives” of Banking and Financial System Evaluation Committee, Japan Bank, 2007; "Managing collective investment fund" by Ekaterina Alexeeva, Sally Buxton, Mark St Giles in 2000

In the above works, the authors have focused on clarifying the content

of risks, concepts, defining the inner meaning of the term; role and impact

of risks on business activities; risk identification method; risk assessment criteria and risk management for some types of funds Point out the risk measurement model and the formation of conditions to ensure the development of risk measurement and control models for development investment funds

1.3 Evaluate domestic and foreign studies and research gaps

1.3.1 Evaluation of domestic and foreign studies

In general, the research on risk management for Development Investment Funds in Vietnam and abroad has mainly provided measures to prevent or limit risks and not focus much on risk management of the Funds, meaning that risk is a problem that always happens in the operation of the Fund In addition, there is no scientific research on comprehensive risk management as well as proposing a system of solutions to enhance risk management for Development Investment Funds in Vietnam

In other words, these works mainly address issues related to the risk management theory of some business entities in some countries and Vietnam, but none of the works mentioned to the risk management of the Bac Ninh Development Investment Fund Therefore, this is a new research direction and the author made that in addition to helping the Bac Ninh Development Investment Fund to develop sustainably, there will be significant contributions to the field of practical application of risk management in Vietnam

1.3.2 Research gaps

From domestic and foreign studies on risks and risk management of financial institutions, research and development investment funds of PhD students find some research gaps as follows:

- The rationale system of risk and risk management associated with the administration of a financial institution (development investment fund), responsible to the State for investment, lending and security However, it is not logical and systematic to serve socio-economic development in Vietnam

- The risk management process of the development investment fund in Vietnam in general and Bac Ninh in particular has many differences from other economic organizations (such as banks), so this process needs to be clarify

- The external environment, internal environment is the main factor the impact on fund operations and factors that constitute risk and determining how to respond to the risks of these funds, however, this is a problem that the aforementioned studies haven't mentioned

- The reality of risks and risk management in domestic financial institutions, especially local development investment funds, should be carefully studied and analyzed, thereby proposing solutions to manage appropriate risk treatment

1.4 Questions, research hypotheses

1.4.1 Research question

Question 1: Does Bac Ninh Development Investment Fund inherit experience of risk management of other financial institutions in risk management?

Question 2: What are the risks faced by Bac Ninh Development Investment Fund in operation, direct investment, lending and guarantee? Question 3: How does risk management of the Bac Ninh Development Investment Fund take place?

Question 4: What factors affect risk management at the Bac Ninh Development Investment Fund?

Question 5: What is the solution to improve risk management for Bac Ninh Development Investment Fund in the period of 2019-2025?

1.4.2 Research hypotheses

Hypothesis 1: Risk management of the development investment

fund basically inherit the risk management of financial institutions, including: developing risk management plans, risk identification, risk analysis and evaluation, risk handling, monitoring and reporting

Hypothesis 2: In the process of operation, investment and lending of

investment funds in general, Bac Ninh Development Investment Fund also encountered a series of risks such as capital loss, market risk, and institutional risk These risks arise from various sources such as from customers, from the fund's activities, from the macro environment

Investment Fund are often associated with lending, direct investment and credit guarantees; this activity is identified through the stages of risk management planning, risk identification, risk analysis and evaluation, risk handling, monitoring and consultancy

Hypothesis 4: Risk management of Bac Ninh Investment and

Development Fund are influenced by management, business organizational structure and operational institutions, human resources of the Fund and customers' deliberate fraud Meanwhile, the less influential factors are customers' awareness and ability to repay debts, corporate culture

Hypothesis 5: Developing a reasonable risk management strategy,

considering this as a basic component of the Fund's business strategy and strictly implementing the organization will minimize risks and control risks in process of promoting direct investment, lending and guarantee

Chapter 2: THEORETICAL AND PRACTICAL BASIS FOR RISK MANAGEMENT IN DEVELOPMENT INVESTMENT FUNDS

As is well known, the Development Investment Fund is a financial institution because according to Siklos, Pierre, 2001, and Robert E Wright and Vincenzo Quadrini, 2012, financial institutions are financial institutions that are established by law and engaged in business activities as a financial intermediary in the process of transferring capital from lender to borrower

These financial institutions include banks, entrusted businesses, insurance businesses, development investment funds, brokerage companies and other investment agents The content of this chapter will focus on the following key aspects

2.1 Overview of risks, risk management

2.1.1 Risk

The concept of risk became the center of theory and practice in financial institutions from Markowitz's research over 80 years ago Accordingly, the risk is the level of instability of the rate of return, based on a measure of variance and standard deviation However, risk management has only emerged as an independent issue in recent decades The author of the dissertation said that risks are basically risks, probabilities of an event, and negative impact on the operation of a financial institution

In summary, risks are present in all aspects of life in different forms depending on each stage, characteristics of industries and fields Therefore, businesses need to develop an appropriate risk management program to minimize risks and improve business efficiency Depending on the characteristics of the industry, one can use different management tools and methods and make the best use of the positive effects from the factors affecting the risk management process

2.1.2 Risk management concept

It can be concluded that the author fully agrees and shares the risk management concept of Roebt and Bob as pointed out above, but needs to add some aspects, such as risk management of a development investment fund is a decision-making process that ensures the highest level of security

by reducing the impact of risk-assessing factors In business practice, risk management should be seen as an integral part of the Development Investment Fund’s development strategy It must be emphasized that, after being identified, and risk management will be an integral part in the operation of the funds and managers need to monitor the extent of its impact to the financial situation and business status Ultimately, risk management aims to eliminate or at least mitigate the effects of factors that may harm to business process of the Development Investment

In other words, "Managing risk is both a science, just as the art to identify, analyze, process, control and monitor risks to help Development

Investment Fund achieve the best; while contributing prevent and prevent unexpected risks” Therefore, referring to risk management means referring

to proactive, positive management processes, discovering potential risks which have not been identified on departments seize and apply opportunities from factors affecting the operation of risk management; from there, work out coping plans as well as contingency plans Moreover, this step should be done in a scientific way, in combination with the methods and tools appropriate, apply the right time and business requirements of Development Investment Fund to promote the highest efficiency of the governance process risk

2.2 Local development investment fund

2.2.1 Investment fund concept

2.2.2 Local development investment fund

A local Development Investment Fund is a financial institution established

by local governments, operating as a financial enterprise, under the management

of the Ministry of Finance (vertically) and provincial People's Committees (horizontal) In which, local governments own 100% capital For more than a decade since the government issued Decree 138 (2007), local Development Investment Funds have been proactive and flexible in business activities and have successfully accomplished their goals and missions due to localities shall allocate

to attach development investment funds

2.3 The content of risk management at the development investment fund

It can be said that, from the above approaches, the author of this work thinks that the inner meaning of risk management, basically includes (diagram 1 below):

1 Building a risk management plan;

(2) Risks identifying

(1) Building a risk management plan

(4) Risks handling

(5) Risks monitoring, advice and reporting

(3) Risks analyzing

and assessing

Diagram 1: Internal function of risk management

2.3.1 Building a risk management plan

It should be noted that, from a business management science perspective, developing a risk management plan is the first and decisive factor The work that a financial institution, including development investment funds, must do at this stage is to grasp the environmental characteristics in which the business is operating, on which basis, draft a management plan Managing risks associated with business strategy

In this plan, external environmental factors and the internal operating mechanism of the business are considered in terms of regulations, requirements, codes, standards, industry guidelines as well as documents of enterprises, related organizations, reports as well as business plans, operations and risk management of enterprises in the previous period (previous year, previous quarter) etc

The tools used to develop risk management plans include SWOT (Strengths, Weaknesses, Opportunities, and Challenges) and PEST (Political, Economic, Social and Technical technologies) in a framework

2.3.2 Risks identifying

Using the information gathered from the context, and classified by the SWOT and PEST analysis tools, the next step is to identify risks that may affect the achievement of the business goals, even the activities