Research On The Operational Risk Management Of Dezhou Branch Of China Construction Bank

Business activities are accompanied by bank risk, which refer to the possibility of economic losses due to various factors or the possibility of bank assets and income suffering from losses. It mainly includes credit risk, market risk and operational risk., For a long period in the past, credit risk and market risk have been the focus of the bank’s risk management, while operational risk is ignored in the Chinese and Western bank industry although it is inherent for the bank. The term of operational risk is not included in the laws and regulations issued by the Basel Committee on Banking Supervision until1990. In the context of the ever-accelerating economic globalization, the business scope of commercial banks is expanding, and interbank competition is increasingly fierce. As a result, operational risk is attracting more and more attention by the industry. Compared to market risk and credit risk, operational risk mainly comes from within the bank. Commercial banks’limited understanding of the operational risk as well as the difficulty in measuring and predicting the losses arising from the operational risk make it harder to perform operational risk management. In recent years, the common occurrence of shocking losses resulting from the operational risk both at home and abroad greatly impacts the sound operation and the profitability of banks, having a negative effect on the society. Thus, commercial banks attach increasingly greater importance to the operational risk.First of all, this paper presents the basic theory on operational risk, and illustrates the definition, characteristics and classification of operational risk, as well as the relationship with other risks, followed by the introduction of the concept of operational risk management and the framework of commercial banks conducting operational risk management. Based on that, this paper takes Dezhou CCB (China Construction Bank) as an example, and elaborates the identification basis of the operational risk and the distribution of operational risk in major business lines. Furthermore, this paper locates the problems existing in the operational risk management, gives an in-depth analysis of the reasons, and proposes feasible measures to enhance the operational risk management of Dezhou CCB from the perspectives of control and prevention. In short, the paper is aimed to explore effective measures to strengthen the operational risk management of Dezhou CCB by way of detecting the problems affecting the branch’s operational risk management, and is expected to provide a useful reference to improve the operational risk prevention and control of commercial banks, especially the secondary branches.