Research On The Operational Risks In Chinese Commercial Banks

In recent years, along with operational risk events of commercial banks havehappened frequently in our country, which seriously have influenced the stable andhealthy development of banking industry,some research related to operational risks ofcommercial banks has been highlighted. The study of operational risks in China, however,started late relatively, so the management level of operational risks of commercial Banksis not high. In this regard, In order to scientifically quantify operational risk effectively,combined with current situation of China’s operational risk，we should select a moreadvanced model to measure operational risk in our country. This is very important toimprove the level of management and control of operational risk.To gradually deepen the study of operational risk of China’s commercial banks, firstly,introducing the current situation of operational risks at home and abroad as well as somebasic and related theories in the research.Secondly, analyzing the current situation and thecauses of operational risk based on operational risk loss data that we collected. Again,introducing the growth of the methods of measuring commercial banks’ operational risk,comparing the pros and cons of VaRious methods, obtain the results that the lossdistribution approach which have improved is the best choice for measuring the capital ofoperational risk of China’s commercial banks.For this,this paper is based on the public data from1991to2013, a total of23years ofoperational risk loss data of commercial banks in our country then using the lossdistribution approach based on monte carlo simulation to measure the economic capital ofoperational risks.And giving principles and procedures based on the loss distribution ofthe Monte Carlo simulation. In the empirical process,on the one hand, using the actual lossdata to fit out the optimal loss frequency and loss intensity distribution, on the other hand,using the advanced risk management software named crystal ball, so that we can make upthe monte carlo simulation to the high level with100000times, and getting the overallloss distribution function.And calculating the value at risk (VaR) by overall lossdistribution function, also known as risk capital required configuration,Calculation resultswe obtained are more accurate, we can implement more effectively quantitativemanagement of the operational risk of commercial banks, that both for the banksthemselves to manage and control operational risk better and for the banking regulatoryagencies to regulatory operational risk better is very important. At last on the operational risk management, we give some advice to improve the levelof controlling and management of operational risks of commercial banks from two aspects,one is the construction of internal management system on operational risks, the other isperfecting the external constraint. To aim at the purpose that improving the level ofoperational risks management so that reducing the chance that operational risks threat tocommercial banks effectively.