Risk Management of Securities Firms

In the process of transitioning from traditional services to capital intermediation and wealth management, securities firms are facing increasingly complex risks, such as market volatility and credit defaults. Based on this, this study explores the risk management challenges faced by securities companies in the transformation of financial markets. Based on the method of literature analysis, this paper identifies five main risk categories faced by securities firms, namely, credit risk, liquidity risk, operational risk, technical risk and compliance risk, and deeply analyzes the multidimensional nature of risk driving factors, from external shocks to internal defects. This paper innovatively proposes a three-pillar risk management approach: (1) Technology Enablement Pillar, which significantly enhances risk identification transparency through the deployment of artificial intelligence real-time monitoring systems and blockchain regulatory technology solutions; (2) Governance Strengthening Pillar, which relies on the three lines of defense model and forward-looking stress testing to improve the risk management architecture; and (3) Compliance Innovation Pillar, which draws on the Sharia review mechanism of Islamic finance to develop a cross-cultural compliance monitoring system. Chinese securities firms need to upgrade their risk management system architecture,.This discovery is not only important for maintaining the stability of the capital market, but also provides Eastern experience for global financial regulatory reform.