Optimization of financial risk management model- Application of VaR model

In today´s increasingly developed capital market, the listed companies in China have more and more capital and financial activities in the global capital market. However, as the financial storm triggered by subprime mortgage crisis in the U.S. sweep the world destructively and rampage from the financial sector to the real economy, the listed companies are facing increasingly complex risk environment. In addition, their scope of business is more and more diverse and globalized. Therefore, how to manage financial risks during the survival and development process of listed companies so that they can enjoy healthy development in fierce capital market competition has become the principle problem challenging business managers. It also requires better capital management abilities of listed companies. This paper, combining current situation of financial crisis and financial risks confronting listed companies, will discuss this problem by introducing VaR method, which is hot in the field of risk management.