City Commercial Banks Operating Risk Prevention Exploration

The banking industry is the core part of the contemporary economy, and its stability and security plays key importance to the economic system. With the globalization and the further reform of the Chinese financial area, the banking industry has experienced rapid growth. And the city commercial banks have advanced so impressively that these banks have carried a big weight in the financial area. With the bank's size-expanding, innovations of financial instruments, the product-diversification, and the operational risks have shown signals with complicated and diversified characteristics. And city commercial banks have suffered heavy losses due to recent operational default events. These lessons compel the banks put more and more attention to the operational risk management in their daily business.The paper did empirical analysis of the operational management in the BANK OF CHONGQING. In this paper we discussed the operational risk management concepts, types, valuation methods and control skills, following that, we also examined the causes of the operational risk, the insufficient parts in the routine management, and suggested some corresponding precaution measures.We did deep research on the challenges and issues confronted with BANK OF CHONWQING in this paper, which includes the lack of awareness on operational risk, the deficiency of professionals, the imperfectness of the current operational risk management structure, the lagged management skills, the limitation of historical data, the lack of fund and the poor external environment. We proposed some detailed measures to guard against the potential operational risk:improving the corporate governance mechanism, setting up the risk management structure, strengthening the risk awareness, introducing the prudent management concept, training the managerial personnel, enhancing the regulatory compliance work, strengthening the technical support.This paper developed the operational risk management methodology and practical techniques in the Chinese city commercial bank. As a empirical study, this paper used comparison skill, empirical analysis and historical dialectics to examine the BOCQ operational risk management issues, and stated corresponding conclusions. Hopefully, this study will bring some useful information and inspirations to other city commercial banks in the operational risk management field.