China has issued guidelines ordering major state-owned firms to tighten risk control as they become integrated with the global economy. "Along with globalisation, our enterprises face an increasing variety of risks," the State-owned Assets Supervision and Administration Commission (SASAC), the top state asset supervisor, said in a statement on Tuesday.
"Comprehensive risk-control mechanisms are needed to help enterprises develop in a stable way, prevent erosion of state assets, and protect the interests of investors," SASAC said on its Web site (www.sasac.gov.cn). It gave guidelines for how companies controlled by China's central government should control risks, and required firms under local governments to refer to the principles.
All centrally controlled companies must appoint enough full-time staff for risk control, and establish mechanisms for internal reporting, auditing supervision and risk detection.
Companies must pay special attention to financial risks which could cause debt defaults, risks to raw material supplies which could interrupt operations, and market risks which could prevent them from selling new products.