Study On The Management Of Operational Risks Of SP Commercial Bank

The bank's operational risks, together with the credit risks and market risks, are seen as the three major risks of the commercial bank. The operational risks existed before the commercial bank's appearance. It is more common and could bring more damages than credit risks and market risks. However, until the early 1990s, after a series of financial criminal cases happened, people began to pay serious attention on the operational risks and it was bring into the Basle Agreement by the Basle Commission, which caused more attention and research on operational risks around the world. So far, the studies around the world on operational risk management are still in the starting stage, and the major work is the identification and the measure of operational risks.In recent years, there are more and more financial criminal cases occurring inside the domestic commercial banking system, which are caused by operational risks andincured significant loss. For example, the ex-chairman of the China Construction Bank did 10 million venality; a high-level officer of the Bank of China Beijing branch did the fraudulent loan crime of 640 millions. The chairman of sub-branch of BOC Heilongjiang branch and the chairman of Guangda bank Guangzhou branch cheated many millions and run away. These phenomenons reveal that there are many defects and disadvantages in operational risk management in Chinese commercial banking system.â–¡â–¡So we know that operational risk is a major fator which causes those cases. Since the middle of 1990s, China Banking Regulatory Commission and the most commercial banks' strata of management kept the continuous reform and supervision towards the operational risk management, but why there are still so many financial criminal cases happening? Therefore, this paper believes that it's necessary to do more deep research towards commercial banking operational risks, in order to increase the defense-ability and safety for commercial banks.This essay firstly introduces the development process of the operational risk management from both international and domestic markets as the background instruction of this research. Secondly, it identifies the definition, types, features of the operational risks and enumerates current situations of the domestic SP commercial banks'operational risk management, based on which, together with some relative theories, it points out the problems and reasons of the operational risk management. In the final part, it summarizes six main suggestions such as internal controlling, better supervising, completing the risk management system, using more suitable econometric models, exploring more significant incentive mechanism, and more strict punishment policy, in order to help defense the domestic banking operational risks more efficiently.