Study On Operational Risk Control Of Letter Of Credit Business Of Chinese Commercial Banks

Recently operational risk has been getting more attention by the international banking industry in the field of risk control management. In 2004, the Basel Committee on Banking Supervision officially issued the New Basel Capital Accord. In this accord, operational risk is initially included in the frame of calculating the regulatory capital, which indicates the international banking industry officially acknowledges that the level of operational risk directly affects the capital adequacy of a bank. Since then, the operational risk as an independent managed object is getting more attention by the regulation institutes and commercial banks. Because recently many serious events caused by the operational risk in the business of letters of credits occur frequently in our commercial banks and have created the huge economic losses to the commercial banks, therefore, it would be helpful to make an analysis to the control of operational risk in the business of letters of credits of our commercial banks on the basis of New Basel Capital Accord.Firstly, this thesis analyzes how the operational risk in the business of letters of credits formed in our commercial banks from aspects of institution, staff of banks, technology and external factors. Secondly, this thesis analyzes the various forms of operational risk and its damages to our commercial banks' business of letters of credits through a specific case study, which indicates the necessity to strengthen the control of the operational risk in the business of letters of credits in our commercial banks. Finally this thesis proposes a unified management frame of operational risk including the risk culture, organization system, process system, report system and incentive-restraint mechanism on the basis of above-mentioned analysis and the New Basel Capital Accord. Then it proposes some suggestions on how to strengthen the control of the operational risk in the business of letters of credits in our commercial banks, mainly including strengthening of the internal control system , management of business staff of banks, management of computer system and prevention of business frauds of letters of credits.