Research On The Internal Control Of The Operational Risk Of Commercial Banks In China

As an industry, banking is full of risks. Scientific managements and preventions toward various risks have direct effect on the development of banking. Presently, the major banking risks can be generally listed into 3 types: the market risk, the credit risks and the operational risk. Comparatively, the other two risks have arouse great attention by the fiance institutions earlier, meanwhile, the mature and complete risk management framework of which have been set up. The operational risk has been exited for a long while, however, it's importance hasn't been recognized by commercial banks and supervision institutions. Since the 90s, numerous of serious operational events have happened in banking industry home and abroad, brought great fund lost to the commercial banks and produced negative effect in the society, so that the operational risk got broad attention and highly recognition from banking industry, supervision institutions and academic circle. Because of the late recognition toward the operational risk, the banking industry hasn't formed an integrated theory system of the operational risk's definition, clarification, management methods, etc, up to now. The resent researches to the operational risk mostly adopt the research train of thoughts of the market risk and the credit risk, focus on the quantification models, rarely learn the relationship between the operational risk and internal control or corporate governance, etc, such basic theories.The thesis reviews the research results of the operational risk in commercial banks home and abroad, then, studies the basic theories of the internal control of the operational risk and seeks for the relationship between the operational risk and internal control by studying all the aspects of the operational risk, such as definition, clarification, management practices, etc, reaching the result that internal control is the fundamental management method of the operational risk, which settled the research foundation of the thesis. On the basis of what mentioned above, firstly, the thesis chooses six countries-representative-prominent banks to study their internal control practices of the operational risk, to summer up the successful experiences for our commercial banks. Secondly, research on the operational risk of our commercial banks, through the comparation of lost data of the operational risk in commercial banks between home and abroad, getting the result that the operational risk of our commercial banks mainly lies in the inefficient and incomplete internal control system, then, through the analysis of the internal control practices of the operational risk in our commercial banks, the thesis conclude the practicing effect and find the problems and limitations. Thirdly, focusing on the problems, learning from the successful experiences of foreign banks, the thesis establishes the internal control system of the operational risk of our commercial banks, formed a realistic, practical, complete, and integrated framework. Thirdly, the thesis studies a case of "Gaoshan" in the bank of China (BOC), which is a broadly disputed operational risk incident happened in 2004, tries to find the limitation and inefficiency in internal control of the operational risk of BOC, using the train of research thoughts in the structuring process of the system, and provides some reference and suggestion to the implement and improvement of internal control of the operational risk in our commercial banks.All in all, by the research, the thesis achieve the conclusion that setting up the internal control system of the operational risk of our commercial banks is the fundamental way to solve the problem of the emerging operational events and financial cases.