Operational Risk Management Of HQ Bank

A lot of high cases caused by bank's operational risk had happed since the 80s of the 20th century in the financial world. So more and more banks began to forces on the Operation Risk, they have made process to defect and reduce the losses on Operation Risk. In 2004, the Basel Committee on Banking Supervision (the Committee) was released the overview paper as an accompaniment to its third consultative paper (CP3) on the New Basel Capital Accord (also known as BaselⅡ). The issuance of CP3 represents an important step in putting the new capital adequacy framework in place.The Committee believes that operational risk is an important risk facing banks and that banks need to hold capital to protect against losses from it. Within the BaselⅡframework, operational risk is defined as the risk of losses resulting from inadequate or failed internal processes, people and systems, or external events. This is another area where the Committee has developed a new regulatory capital approach. As with credit risk, the Committee builds on banks' rapidly developing internal assessment techniques and seeks to provide incentives for banks to improve upon those techniques, and more broadly, their management of operational risk over time. This is particularly true of the Advanced Measurement Approaches (AMA) to operational risk described below.HQ Bank (China) is sub-company of Singapore HQ Bank. In 2007, HQ Bank establish the central bank of HQ Bank (China), start provide the business services in China. HQ Bank (Singapore) have 100 years history, they own advance experience in management of operational risk process domain. But, HQ Bank (China) is new company in China financial market. But, HQ Bank (China) also raises a lot of questions on management of operational risk, some reasons: firstly, HQ Bank's processes were not much adequate for practical situations. For example, Chinese staff always can not really have good understanding of cultures and rules of HQ Group.Finally, we hope to calculate the capital of Operational Risk according to Basle II required. We use the tools and formula provided by Basle Committee to make analysis about what's the truth and root-cause. According to results, we will raise our comments and suggestions how to manage operational risk and how to reduce capital losses.