Study On The Problems And Prevention Measures Of Operational Risk Management In Branches Of Large State-owned Bank

Banking is an industry with high risk. It is essential to maintain the sound development of banking industry by preventing, managing and resolving the risk. The scientific and efficient management of financial risk can not only guarantee the sound and sustainable operation of banking and financial organizations, but also reduce the capital cost for preventing financial risk and enhance competitiveness of the banks. Currently, the main risks of financial organizations include market risk, credit risk and operational risk, In recent years, with financial globalization, the loose financial management, rising complexity of financial techniques and growing richness of financial service products, an increasing probability of bank operational risk may occur. In addition, the negative influence of operational risk loss incident to bank could be indirect and long-lasting, Thus, the importance of operational risk in financial practice is gradually becoming obvious. Meanwhile, as for the Chinese banking industry, it is developing in the environment of economic transition, and it is accelerating the policy of opening to the outside world and carrying out reforms at home. On the one hand, banks are under the pressure of meeting the needs of supervising of New Basle Capital Accord, on the other hand, as the fraud and illegal incidents in most embranchments of domestic financial organizations are increasing, the operational risk management for Chinese financial organizations is becoming urgent. The five major large state-owned banks, including Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank and Communications Bank of China, are enjoying the rising of domestic total assets from2006to2012. By the year2012, the total assets and total loan grew by143.24%and143.75%respectively, comparing to those of the end of2006. Meanwhile, the total assets and total loan accounted for44.14%and44.31%respectively, in whole banking and financial organizations, the large state-owned banks are major players in the whole domestic banking and financial organizations. To sum up. it is significant to correctly and comprehensively learn the operational risk, focus on the management of operational risk in large state-owned banks, especially the branches’, establish a complete and efficient system of operational risk management, and enhance the management and supervision, and guarantee the overall sound operation of branches, in order to safeguard the stabilization in domestic financial order.The thesis is divided into the following six parts:In the first part, which is known as the introduction part, the author analyzes the background, purpose, research approach, major contributions and deficiencies of the topic-the problems and prevention measures of operational risk management in branches of large state-owned bank. The second part is literature statement, which mainly introduces the definition, categories and features of operational risk, and the theories, framework and methods of operational risk management. The third part illustrates the features of the operational risk in branches of large state-owned bank, the form of the risk, cause of the risk and the current situation of management. The fourth part analyzes the real cases in operation of branches of large state owned bank. The fifth part describes the establishment and development of management system of the operational risk in branches of large state-owned bank. The sixth part illustrates the prevention policies of management of operational risk in branches of large state-owned bank.According to the study results, the original intention of the thesis is relatively adequately achieved. On the basis of the current study in this regard, the contributions of the thesis fall into the following three aspects:1. The view of the research is unique. The author summarizes the features of operational risk in branches of large state-owned bank, the form of the risk, cause of the risk and the current situation of management.2. The leading clue of the study closely clings to the reform direction. The thesis is studied under the operational risk requirement of Basel Ⅲ and Capital Management of Financial Banks (trial)(2012No.1by China Banking Regulatory Commission).3. The clue of the research is clear. It properly put forward the prevention measures of operational risk in branches of large state-owned bank. By studying the case of real operational risk in branches of large state-owned bank, the defects and shortages of current management and operation system are reflected. In the end, the author suggests establishing and completing the management system of operational risk in branches of large state-owned bank, and the prevention policies of operational risk are also mentioned.Without doubt, this thesis has its own defects, which mainly fall into the following two parts.In the first place, the study is relatively unilateral. Although the author has long working experience of supervising the branches of large state-owned bank, the contacts with other financial organizations are relatively few. Thus, for the author, the operational risks in those sectors are not familiar. Therefore, the study on the current situation and prevention policies in this regard are unilateral.In the second place, the cases in this thesis are not typical enough from some aspects. The author illustrates the case of her familiar branches of large state-owned bank in a second-tier city, while other cities and organization are not mentioned.