China's Commercial Banking Operation Risk Assessment Method

In ecnomic systems, commercial banks are important to economic security and money market. In the past years, the banking and theorists attached great importance to credit risk and market risk, but didn't attach enough importance to operational risk management. Since the 1990s, loss events lead to bank failures occurred so frequently that it has attracted attention of host supervisor, the banking and theorists. Operational risk has become one of the most serious problems.The research of operational risk management in China far behind international level. The ability to exercise management of operational risk in our country need to be improved. Compared with western countries, we still have a long way to go. In recent years, operatioanl risk loss events occurred so frequcently that scholars in our country attached much more importance to operational risk management. The paper evaluates the operational risk of China's commercial banks which are selected. The contents of study in this paper are as follows:First, the paper reviews the definition of operational risk and classified method which is written in domestic and international papers. Analyse the causes of opertaional risk according to China's commercial banks'feature;Second, introduce theory of rough set which is used to sort evaluation indexes. The sorted evaluation indexes compose China's operational risk rating indicator system;Third, introduce theory of Analytic Network Process(ANP) and Super Decision Software which is used to caculation the model of ANP. This paper use the model of ANP to work out the weights of each indicator;Fouth, illuminate Cloud Focus Theory and its improved method. Select 8 commercial banks as illustrative example, which is used to be rated by improved Cloud Focus Theory;Fifth, introduce theory of Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) which is used to rate the selected commercial banks;Sixth, introduce theory of comprehensive evaluation and Fuzzy Borda Method briefly. Combine the results of Cloud Focus Theory and TOPSIS, in order to get a more accurate rating result.This paper is a research investigation of operational risk, focus on proposing some useful advice to improve the management of China's commercial banks. We wish this paper would provide a way to host supervisor to acquaint the state of commercial banks so that they could do something to at-risk banks. This paper provide a way to help commercial banks to know more about management level of itself in the banking so that they could assess itself effectively. This paper provide a way to customers so that they could choose safer commercial banks as partner.