Research on Optimizing Risk Management of Securities Institutions Under Financial Cycle Fluctuations

Abstract

Financial cycle fluctuations, as a significant feature of macroeconomic and financial market operations, exert profound impacts on the business models and risk profiles of securities institutions. During expansion phases, securities firms often benefit from rising asset prices and abundant liquidity, yet simultaneously accumulate potential risks of high leverage and concentration. In contraction phases, however, they may face multiple challenges such as asset value depreciation, frequent credit defaults, and tightened liquidity. This paper systematically analyzes the transmission mechanisms through which financial cycle fluctuations affect market risk, credit risk, and liquidity risk in securities institutions. It further proposes optimization pathways including the establishment of a dynamic risk appetite management system, the strengthening of full-cycle risk identification and measurement capabilities, the improvement of cross-cycle risk management coordination mechanisms, and the innovation of adaptive risk management tools. These strategies aim to provide both theoretical and practical guidance for enhancing securities institutions’ capacity for steady operation and risk prevention across financial cycles.