The Model Analysis Of Bank Operational Risk

Operational Risk is long ignored by the commercial banks. But with the development of the globalization, the operational risk occurs more often and brings more lost. As our country is going to open our RMB business to the whole world, whether we can handle the problem of operation risk is very important to the development of our countries'commercial banks. The model of analyzing the operational risk is very important to the internal risk management of the banks and to meet the requirements of the outside supervision.My article has an all-round research on the model of the operational risk analysis and composed of 5 parts. Firstly the article tells the background and meaning of this topic and gives a brief of the research in the world. It also tells the research method and innovation of this article. Secondly, it gives a definition of the operational risk and its feature. It also compares operational risk to market risk and credit risk. Then it gives an idea about the top- down method and their application in China. It focuses on three methods of bank operational risk: the income model, the basic index model and the payout model. These 3 models are applied to the data from the 1st quarter of 2002 to the 2nd quarter of 2007 of Shanghai Pudong Development Bank, Shengzheng Development Bank and China Minsheng Bank. From the research, different methods lead to different operational risk capital. Because we can not find the percentage of the operational risk capital of the total capital, we use the percentage of the big banks in the world to appraise theis 3 models. We find that the operational risk capital estimated by the income model is most close to the one used by the big banks in the world. So we think that the income model is the best one to be used. Last but not least, the article gives the suggestion about how to manage our operational risk according to our banks'characteristic.The innovation of the article is that it has some improvement on the data collection and the income model. And the article has a very in-depth analysis of the advantages and disadvantages of the 3 models. It also gives a very clear suggestion to the management of our banks. This we point a road to the development and perfection of the model of the operational risk. The outcome of this article will give a hint to the government and commercial banks about how to calculate their operational risk.