A Study On The Operational Risk Management In China’s Bank Industry

Operational risk is one of the oldest threatens of banking industry. However, our understanding of the risk of this ancient species is very limit. Even in the first edition of "the Basel agreement", which released in1988, there is no mentioning of operational risk. Until1995, when the young Nick Leeson broke down the famous Barings Bank though his rogue trading, finally the bankers and supervisors decide to improve their operational risk. The Basel Ⅱ mentioned the operational risk as one of the core risk as market risk and credit risk. Until now, after years of development, the western financial sector in developed countries generally established a relatively perfect operational risk management system, and summarizes a set of corresponding to their own situation of operational risk management approach. However, operational risk management is still not in a good shape in the reality of China’s banking industry. My article begins from the analysis of the reality of operation risk management in China, analyzes the main problems of our country commercial bank operation risk management, combined with the international advanced operational risk management experience, putting forward some policy suggestions to improve our country commercial bank operation risk management.There are some innovations in this paper. Firstly, I made a great effort collecting the operational risk data in China, and implemented a descriptive statistics from several aspects. Secondly, This paper put forward the idea of establish a Shared database on operational risks in China, and use the database to perform the effective risk measures on operational risks, and utilizing the method of economic capital of commercial Banks operating risk management performance evaluation on the basis of the estimation.However, there are some defect in my paper. Firstly, this paper mainly focused on the practice of applied research, therefore has not made remarkable achievement on the theoretical study. Secondly, This paper is proposed to adopt advanced technology to analysis the performance of operation risk management, but due to the lack of basic data, I didn’t carry out those technology in this paper. There are still many issues remain unsolved. I hope I still have the opportunity to finish them in the future.