Study On The Operational Risk Of Commercial Bank In China

Banking industry is full of risks and whether or not those risks can be scientifically managedand prevented is closely related to the development of banks. The risks faced by financialinstitutions are market risk, credit risk and operational risk. For a long time, the Western bankshave made considerable in-depth research and formed a set of risk management conception andmodel. However the research and concern about the operational risk is relatively backward.Science90s,20thcentury, the event of suffering huge losses, presented by Barings bank andResona bank, took place again and again. This makes bank manager and regulators pay more andmore attention to the importance of the operational risk management. Now, both financialsupervision and financial institution strengthen the management and control of the operationalrisk unprecedentedly. Although the international banking has suffered huge loss due tooperational risk, no bank has built improved frame of systematical management of operationalrisk. Furthermore, the means concerning supervision and management operational risk is still inthe rough. Therefore, how to control operational risk effectively becomes a new topic ahead ofthe banking industry.The first part of the article is the introduction, describes the background and significance ofresearch, literature review, and articles on the content and structure.The second part is the introduction of operational risk. It mainly introduces the definition ofoperational risk and the three methods of measuring operational risk came up with BaselCommittee, which are Basic Indicator Approach, Standardization Approach and AdvancedMeasurement Method.The third part is the concrete form of commercial bank operational risk and the empiricalanalysis. Based on the management practice of our country’s commercial bank, we divideoperational risk event into six categories: execution factor event, regulation and procedure factorevent, system factor event, morality factor event, customer factor event and force majeure factorevent.The forth part introduces the management pattern of operational risk of foreign banks, anddiscloses the characteristic of the management of operational risk of foreign banks.The fifth part is the analysis of the current situation of the management of operational risk ofour country’s commercial bank and introduces its development procedure. It thoroughly analyzesthe main problem existing in the system of the current risk management system of our county’scommercial bank.The sixth part put forward corresponding suggestion referred to the problems stated above which mainly consists of:we should strengthen operational risk management culture;rise riskprevention consciousness;execute operational risk assessment mechanism in advance; buildeffective operational risk management frame; build a centralized operations and remoteauthorization system;control the risk of branch banks;introduce electronic management andexternal audit method; enrich risk management means;choose the proper operational risk measuremethod and accelerate talents squad construction.The seventh part of the article is the conclusion.