A Comparative Study Of The Operational Risk Management Between Domestic And Foreign Commercial Banks

Operational risk is a common risk in the commercial banking business, but also covers an extremely broad range of risks. From the feature point of view, the operational risk within nature-based, covering almost the entire business, making it difficult to accurately measure, but its cause of risk is often easier to commercial banks on business failure, so since the late1990s international banking increased research and management of the operational risk of commercial banks. International commercial banks operational risk regulatory started in1995after the Barings Bank event pay great attention has been nearly two decades. In the late1990s, with the opening up of China’s financial industry to accelerate the pace of commercial banks and international banking standards advancing, China’s banking industry also began to focus on operating risk, but was not operational risk into strategic height to attach importance to many reasons, a very important reason was that China’s banking industry, especially the monopoly of state-owned commercial banks generally faced with institutional reform, to attend to the specific operational risk. In the beginning of this century, there were several significant operational risk cases really caused a high degree of attention in the industry. On January6,2002, more than40million euro for the Bank of China in Paris9th District Branch of the euro banknotes and franc cash was stolen. In early2005the River Pine Street Branch, Bank of China Heilongjiang Branch Alpine fraud exposure, an amount of nearly10billion Yuan was stolen. This significant financial exposure of the case means commercial banks in operation passive. Operational risk then finally got great importance of the financial regulatory authorities and commercial banks. May14,2007, the China Banking Regulatory Commission foreign commercial banks operational risk management guidelines promulgated. Operational risk of commercial banks, the CBRC issued the commercial banks operational risk management guidelines defined: operational risk from inadequate or failed internal procedures, employees and information technology systems, and external events caused by loss risk. Under the definition of operational risk includes legal risk, but excludes strategic and reputational risk. In October2007, the China Banking Regulatory Commission followed by the introduction of commercial banks operational risk regulatory capital measurement guidelines require measuring operational risk regulatory capital and the voluntary implementation of the New Basel Capital Accord commercial banks must should take. Since then, become the focus in the supervision of the China Banking Financial regulatory operational risk. This paper is divided into five chapters, firstly the background, secondly existing research introduction, thirdly research ideas and organization of the article, fourthly the innovation and inadequacies. The second chapter is current situation and problems of China’s commercial banks operational risk. In this chapter, firstly the paper introduces the status quo, definitions, and characteristics of China’s commercial banks operational risk. Then the paper analyses a case. China’s commercial banks operational risk management started late, coupled with the market economic system is not sound enough, many institutional construction non-existent, leading to operational risk cases occur from time to time, which badly hazards Bank development. The third chapter is to learn from foreign commercial banks operating experience in risk management. The fourth chapter conducts a comparative analysis of various aspects of domestic and foreign commercial banks operational risk management approach.The fifth chapter is countermeasure recommendations. This article gives multiple recommendations for strengthening the risk management of commercial banks operating in China. The article suggests that both internal part and external part of banks, strengthen supervision, will be placed under the effective management of operational risk of commercial banks, so as to effectively avoid operational risks arising from the Bank, and to effectively protect the interests of depositors.This article focus on the combination of theory and practice in the process of analyzing the operational risk management of commercial banks, specification analysis and empirical analysis are combined, using a variety of methods of analysis of the economics, profit maximization purposes of commercial banks, operational risk of commercial banks analysis, hopefully, some inspiration and reference for defense occurrence of operational risk of commercial banks.