Study On Multi-dimensional Risk Management Of Commercial Banks

With the deepening of reform of China's economic and financial institutions, the running environment of bank industry has undergone substantial change. From bearing no risk before China's reform policy to confronting simultaneously credit risk, market risk, operational risk and liquidity risk nowadays, the risk of bank industry in China is expanding vastly. However, our concept of risk is still very dim, our level of risk management is still very poor and our ability to withstand risk is still very weak. We are still unable to meet the need growing day by day of bank industry. So, building up and perfecting banks'risk management institution and improve the level of risk management in China is very urgent and of great practical implications.There are many methods to classify the types of commercial bank risks. This paper adopts the division of risk into four types—credit risk, market risk, operational risk and liquidity risk. The four risks are of different aspect, but they are not isolated and uncorrelated but correlate with as well as affect each other. If we deal with only one aspect separately, the impact may be very poor and we will get half the result with twice the effort. To solve the problem from the stem, we should adopt"multi-dimensional risk management"method.The presenting of the concept of"Multi-dimensional"risk management is the flexible combination of mature risk management theory abroad and China's material reality and suits China best. General risk management is still at the stage of exploring and there is no intact theoretic framework yet, so it has limited use for China's commercial bank. Furthermore, this method has a high requirement for the data base. So even if the theoretic system is mature, it still need a long time to build up a good data base in China in order to popularize the method in managing risk in China's commercial bank. While"multi-dimensional"risk management is relatively easy and has a much lower requirement for the data base, so it suits to popularize rapidly in the practice of risk management in China.The creative points of this paper are: This paper surveyed and hackled both domestic and foreign literature of risk management in commercial bank and pointed out the limitation of existed literature.Circumfusing the system of"multi-dimensional risk", this paper introduced in turn the concept of"risk correlation","risk change correlation","multi-dimensional risk measurements"and"multi-dimensional risk management".This paper gave a detailed presentation of the content of"multi-dimensional"risk management from the four aspects of credit risk, market risk, operational risk and liquidity risk.This paper gave a particular formulation of"multi-dimensional"risk management system with the form of case study.This paper offered corresponding policy advice for the reform of banks'risk management institutions in China form each dimension of"multi-dimensional"risk management system.