The Study On Operational Risk Management Of Commercial Bank

In recent years, the growing sophistication of financial technology,along with deregulation and globalization of finance, has created a variety of new operational risks for commercial banks. The New Basel Capital Accord will require banks to set aside regulatory capital for operational risk-an important development that affects most commercial banks worldwide. Chinese banks have been plagued by several operational risk cases which had great losses in recent years. So the study on operational risk management is of great significance theoretically and practically.The paper starts from the concept of the operational risk and gives its definition of the Basel Committee on Banking Supervision. The paper gets the characteristics of operational risk through foreign and domestic typical case studies. Then the paper introduces and makes comments on qualitative and quantitative models of operational risk management, and gets their advantages and disadvantages. Then the paper discusses the general framework for operational risk management which covers the management organization structure, strategy and policy, management process, infrastructure, the environment, role of supervisors and disclosure. Then the paper discusses three important issues of implementing operational risk management framework in China and gets the conclusion: Bayesian Belief Networks combined with Key Risk Indicator System is the best quantitative management model; insurance as mitigation tool is not suitable for the situation of China; to set up the loss database by the People's Bank of China is the best choice.At the end the paper proposes three steps and seven measures to manage operational risk for Chinese banks. The first step is to improve its internal control system and found a loss database, the second is to establish a suitable risk management model and the third is to create a comprehensive operational risk management framework. And the seven measures are of great application value.