A Study On Operational Risk Management Framework Of Commercial Bank

Operational risk have become one of the most important fields in bank risk management. Globally, financial institutions have suffered from horrific events that occurred frequently because of operational risk。Basel Committee on Banking Supervision(BCBS)calls for the introduction of bank regulatory capital requiements for operational risk in the New Basel Capital Accord(BISⅡ).Both External pressure and internal motivity urges global banking industry to improve operational risk management,from the beginning to establish operational risk management framework.Most domestic banks are still in transformation to authentic commercial bank ,with inadequate management system and weak internal control system。Therefore, they face greater operational risk than international counterparts,suffering huge operational loss. Fundamentally it stems from the absence of a sound operational risk management framework.In this thesis we will endeavor to build an operational risk management framework ,and provide appropriate strategies in introducing China's commercial banks an effective operational risk management framework。BCBS, in close contact with operational risk, makes great efforts to promote the evolution of operational risk management。therefore, chapter 1 had stated those efforts of the organization,so we can understand the evolution of operational risk management, advanced practices of international banking industry. And the establishment of operational risk management framework is one of the most important trends.Chapter 2 is the core part of the thesis。It gives a comprehensive discussion on theory and practice of operational risk management framework。This framework consists of five key interrelated elements ,such as the environment, organizational structure, strategies, tools and technologies,process, etc。then carried out a detailed exploration on each of these elements. These discussion emphasize particularly on practical operation。Chapter 3 first analyzes the status of operational risk management in domestic banking,so that the urgent need to introduce domestic banking a sound operational risk management framework.Because the previous chapter have discussed the operational risk management framework and key elements comprehensively,thus there is no longera comprehensive study but focused discussion of some key issues,that include how to transform the existing organizational structure, the establishment of loss databases, using insurance as a risk mitigation tool,etc. Then chapter 4 focuses on the most important and complicated issues -- the methods and models to quantify operational risk . Finally we put up an empirical analysis about two joint-stock banks, using the basic indicator approach and income model. The latter has been proved to be more practical value,with better assessment results.