The Study Of Operational Risk Measurement Approach Selection In Chinese Commercial Banks

Along with the announcement of the New Basel Accord in 2004, the study of operational risk quantifying has become a focus topic of attention in banking industries. Compared with the credit risk and market risk, there are still no general quantifying model accepted by scholars and banking management. Operational risk incidents happen frequently in our country in recent years shows operational risk has become the main risk faced by banks in China. So, how to improve operational risk management level on the basis of improving operational risk measurement techniques is the urgent task of our banking. Under the background it has weighty significance to study operational risk measurement of our banking.The first part is an overview of the full text, it consists of three parts:the topics of the proposed, literature review and The framework of the full text. The second part provides an overview of the operational risk and lay the groundwork for the empirical analysis. Then this paper introduced and made comparison of three evolutionary models proposed by Basel committee, including Basic Indicator Approach, Standardized Approach and Advanced Measurement Approaches. In the fourth part of this paper, we make contrast of each approach by discussing the Suitability and the outcome of empirical analysis. Considering the lack of data, we only choose BIA,S A and income model to give the empirical analysis of operational risk, It shows the capital requirement based by SA is larger and income model has a better applicability to measure operational risk in Chinese commercial banks. So this paper advised that we could use income model as a supplement approach to SA. Finally, I summarize This paper and proposing countermeasures recommendations for the operating risk measure.