Researchon On The Preventing Of Commercial Banks’ Operating Risk

Societe generale, France’s finance pillar, it is not only France’s second-biggest bank, is also oneof Europe’s most profitable bank. On January24,2008, societe generale trading financial fraud scandals,due to the irregularities of a trader, caused the loss of4.9billion euros, about$7.2billion. The amountinvolved huge fraud made investors confidence in the banking sector to further decline, was threatened bythe subprime mortgage crisis of the European banking again in more heavy shadow, to the banking internalcontrol management and operation risk control and prevention is a wake-up call.Similarly, five years later, a similar thing happenned again to the well-known financialinstitutions JP morgan chase. In March15,2013, morgan’s former investment chief Ina Drew attended thethe United States Senate hearing on the$6.2billion trading loss events, which appeared in2012-"theLondon whale" questioned. The London whale trading violated the zodiac risk limit standard, caused bybetting on credit default swaps. Two huge losses incidents was forced to let Banks rethink profoundly,thinking about how to improve the internal control system, how to avoid the operation risk, how toimprove the supervision system, etc.This article starts from the theory of internal control and the operation risk, and expounds theimportance of the internal control system for the safe operation of commercial banks’ operating risk. In thedaily work, it shows that the operation risk is universal and hard to control, the benefits and risks isasymmetry in commercial Banks. Later, through a brief introduction to French societe generale and thewhole process of societe generale’ trading fruad, it expounds the influence on the fraud from process fromthe supervision mechanism of societe generale, permissions setting with position, corporate culture, rewards or punishment mechanism and information system, reveals the defects in the internal controlsystem of the societe generate. Finally, from the operational risk exposed by the French Societe Generate,trading fraud cases related,combined with the status quo of China’s commercial banks, to guard againstoperational risk in Chinese commercial banks put forward corresponding countermeasure and suggestion.This paper adopted the theory deduction method, case analysis and inductive analysis method,such as research methods, which is divided into six parts. The first part is the introduction, brieflyintroduced the selected topic background and significance, domestic and foreign relevant literature reviewand research methods; The second part USES deductive methods of introduced the relevant theories ofinternal control and operational risk concept, including its concept, development and evolution of internalcontrol, the role of internal control and operational risk characteristics such as content; The third part is thebeginning and end of the introduction of societe generale trading irregularities with; The fourth part USESthe case analysis, combined with case analysis from various angles trading irregularities in the operation ofthe risk formation of reason, such as the analysis from the aspects of supervision mechanism, from the setpermissions and position analysis, from the enterprise culture and the rewards and punishment mechanismanalysis, from the problem of information system are analyzed. Fifth part adopts the inductive analysis,starting from the actual situation of our country commercial bank, draw lessons from foreign advancedexperience, put forward the constructive countermeasures to guard against operational risks in commercialBanks, such as to improve the oversight system for bank, reasonably set permissions department and jobrotation system, change the banking business objectives, establish the corresponding incentive constraintmechanism, strengthen the development of computer system, improve staff quality and professional skills;The sixth is divided into conclusions.Commercial Banks in China must draw lessons from societe generale trading fraud, change the banking sector has always been the pursuit of profits and enhance the competitiveness of blindly goal,reform of the salary incentive system, and Banks in order to prevent staff gain or personal performancerisks, in order to improve the bank loan performance making false transactions, so as to increase theoperational risk. At the same time, our country commercial bank should pay attention to internal controlcompliance culture construction, enhance the employee’s compliance and risk control concept, build goodenterprise culture atmosphere, and upgrade the professional skills of employees, fundamentally reduces theincidence of the commercial bank operation risk.