Zheng Quan Shi Bao Wang·2025-07-08 10:49Core Viewpoint - The case of Dongxu Group serves as a significant warning for companies regarding the importance of risk management and internal controls, highlighting that neglecting these aspects can lead to severe consequences, including substantial financial penalties and market exclusion [4][6]. Financial Performance and Crisis Trajectory - Dongxu Group's financial data revealed a troubling crisis trajectory, with cash reserves evaporating by nearly 50 billion yuan and other receivables surging from 10.2 billion yuan to 65.9 billion yuan, an increase of 55.7 billion yuan [3]. - The group reported revenue of 34.4 billion yuan but incurred a net loss of 32.9 billion yuan, with its two listed companies suffering losses for three consecutive years from 2020 to 2022 [3][4]. Risk Management Failures - The root cause of Dongxu's downfall was its inadequate risk management, characterized by aggressive and blind expansion across multiple industries without a corresponding enhancement in internal controls and risk identification capabilities [4][5]. - The financial fraud exposed within the company exemplified a lack of risk awareness and failure in internal controls [4]. Importance of Risk Control Framework - The book "Three Lines of Defense in Enterprise Risk Management" emphasizes that while development is crucial, neglecting safety can lead to irreversible damage, making risk management a core competitive advantage [4][6]. - Companies must elevate risk management to a strategic priority, establishing a systematic risk management framework to avoid repeating Dongxu's mistakes [4][6]. Recommendations for Effective Risk Management - The highest management must recognize the strategic value of risk control and integrate it into the company's top-level design, allocating necessary resources [5]. - A comprehensive risk management mechanism should be established, covering risk identification, assessment, response, monitoring, and continuous improvement [5]. - A multi-layered defense system should be constructed, with clear responsibilities and collaboration among business units, risk management departments, and audit functions to ensure effective risk control [5][6].