A Study On The Management Of Operational Risk Of Chinese Commercial Banks

At present, the risks that financial institutions face can be generally summarized as market risk, credit risk and operational risk. Market risk and credit risk have attracted the attention of financial institutions long before. Up to now, there have been more mature risk management techniques. Though the concept of operational risk has been put forward for a long time, it has been taken as the three main risks that financial institutions face with the other two risks in recent years. According to the investigation of Basel Committee on Banking Supervision in 2001, there were five "without"in the management of operational risk of the global financial institutions: without uniform definition, without commonly accepted standard, without openly available database, without mature control technology and relevant software, and without enough attention from the local banks and supervision authorities. Compared with the foreign banking, Chinese banking paid attention to operational risk later, the management of operational risk has just begun and been regarded just in recent years. Therefore, there is not an overall, systematic understanding to the operational risk. In that case, no matter management concept, management structure, or management measures of operational risk, all of them are defective and become the main obstacles in the management of operational risk of domestic banking. By drawing on the mature experience and the best practice of international banks and supervision institutions in managing operational risk, and integrating with the actual condition of Chinese banking, this paper did overall and systematic researches on the management of operational risk. Based on the analysis of relevant concepts and management methods of operational risk,the application of its management methods in China, and the current situation of operational risk and its management of Chinese commercial banks, this paper put forward countermeasure and proposal to enhance the management of operational risk of Chinese commercial banks from the aspects of environment and culture, organizational structures, measurement model, prevention and control measure, as well as the construction of competent people and incentive mechanisms.