Research On The Relationship Between Internal Controls And Financial Risk Of Commercial Bank

As the world economic moving towards global integration, the financialinstitutions in the world have developed rapidly. As the scale of the commercialbank has been expended, and a large number of new financial products have beenproduced, the hidden financial risk has been elevated as followed. The financialrisk can divide into a lot of kinds, the reasons are complicated, and theconsequence it caused is serious. The cases that the increasing numbers of banksall over the world have been closed down because of the financial risk havesounded the alarm to prevent the financial risk and urged the scholars andprofessionals in many countries to go further the study of financial risk. Since thereport of COSO puts forward the concept of internal control, the commercialbanks all over the world have been setting up their own system of internal controlin order to prevent the financial risk. So the issues that how and which factors ofthe internal control in commercial bank influence the financial risk has becomean important subject that we face.This text is based on the study and induction of the relevant theory atdomestic and abroad. Firstly it expounds the connotation and the five elements ofthe internal control of commercial bank. Then it builds an evaluation model ofcommercial bank internal control to evaluate the quality of internal control ofcommercial bank comprehensively. Secondly, the article introduces the conceptand the performance of the financial risk of commercial bank, and discusses theinfluence of the quality of internal control to the major performance of financialrisk of commercial banks theoretically, then it uses the relevant provisions ofCBRC (China Banking Regulatory Commission) as an reference to set up a set oftarget system to build the evaluation system of financial risk of commercialbanks. Thirdly, takes the sixteen listed commercial banks in2012in our country as samples to empirical analysis the relationship between internal control andfinancial risk of commercial banks. Finally, the article gives the countermeasuresand suggestions to improve the system of internal control in commercial banksaccording to the result of the analysis before.This article has researched the correlation of internal control and financialrisk of commercial banks, and offered a theoretical support for correlationalresearch. It is beneficial to improve the capacity of financial risk management forcommercial banks in our country during the fierce global competition.