The Research On Enterprise-wide Risk Management Of China's Commercial Banks On Basis Of New Basel Capital Accord

In the end of 2006, China opened its domestic market to foreign banks. Since then, the domestic commercial banks began to compete against their powerful counterparts directly. The edge of wide-spread service network can not last for ever. To improve their risk management capability and profitability is the key to their competition against foreign banks. On the other hand, the publication of New Basel Capital Accord enlightens China's banking regulatory authorities and, at the same time, pressures her to urge commercial banks to establish risk management system in compliance with the perception of the New Basel Capital Accord. Therefore, for China's commercial banks, building an Enterprise-wide Risk Management system (ERM)can not only actively response to the China Bank Regulation Committee's call, but also meet the urgent needs for better risk management capability and profitability.Firstly, this dissertation analyzes the contents of the New Basel Capital Accord and its influence on China's commercial banks' risk management. Then on the basis that the risks which commercial banks are facing are fully considered, this dissertation outlines three principles which guide the building of ERM systems of commercial banks. Under the guideline of the three principles above, this dissertation illustrates the overall framework of ERM system for China's commercial banks, and then builds up the organizational framework and procedure framework which support the smooth operation of the ERM. Among which, the organizational framework of ERM includes three levels which involve headquarter, province and county branches. While the procedure framework of ERM includes seven procedures, which involve risk culture, risk target setting, risk identification, risk overall assess, risk disposal, risk information disclosure and risk management evaluation. Finally, this dissertation analyzes the current obstacles we will encounter while we build the ERM for commercial banks in China. In response to these obstacles, this dissertation offers specific countermeasure and proposals accordingly.