The Research On Operational Risks Of China's Commercial Banks

The operational risk of banking caused a wide concern in the whole world. A number of big banks and financial supervisory institutions begin to transfer the center of management to the operational risk, and develop wide research on operational risk, including the concept and behavior of operational risk, the threaten to the security of banks, the measurement of risks, risk control and the construction of mechanism of operational risk. According to a great number of accidents of operational risk constantly occurred in china's commercial banks as well as the loss resulting from them, it is the high time we did something to do research on operational risk and reinforce our management. This paper begins with the research of operational risks in some active banks in the developed countries to get the rough idea of the meaning and contents of operational risk, the general features by selecting and analyzing the typical operational risk accidents. Meanwhile we tried to explain the internal theoretic mechanism. Based on the classifying standard and research method of operational recommended by Basel Council, we analysis the statistics of operational risks aroused in our commercial banks. Through the work, we compare the research findings and find out the same reasons resulting in risks domestically and abroad, including moral risk, internal control, the design of process and the negative effect brought by the development of information technology. Additionally thanks to different business environment, managing system and the culture of risk between china and other western nations, there are some special reasons and typical features of operational risks in china's banks. The problems are mainly shown on the persons. That is to say people, including manager, employee and others, cause the risks. The moral risks give birth to internal fraud and external fraud that are the absolute reason of operational risks in china. On the other hand, the incomplete and ineffective systems are the sub-important reasons of operational risks. When we further explore the roots of these reasons, we find these reasons finally ascribe to the blemish of property right, which is the pain in the neck in the process of our reforms. Improper property right caused the inefficacy of corporate management structure, and furthermore it led to the laggard business and supervising mechanism. Lack of effective motivation and restriction system and the effective supervising provide the possibilities of illegal behavior of managers and employees in our banks. With the deepening of oureconomic reform and opening up, the competition between banks would be more severe. We are required to do the thorough research on the operational risks in our banks and then get the objective and scientific conclusions. Based on that we have to better our system of property right and management system, reinforce the construction of our internal systems, risk culture and redesign or innovate our operational process. At the same time we have to put more cash into the development of information technology, thus we can overcome our flaw and lower the operational risks. On the research of operational risks in our commercial banks, we are unable to collect the complete loss data. And accordingly the result we got is not very accurate, but it can roughly describe the problems we have. That is the deficiency of the paper, and I would like to improve it in the future.