Research On The Management Of Operational Risk In Commercial Banks Of China Under The Basel New Capital Accord

In June 2004, the Basel Supervisory Committee released "New Basel Capital Accord", which takes operational risk into the framework of management officially. It means that banks in the future will face a more thorough supervision in their affairs. However, the banking circle in China has studied operational risk for a relatively shorter time and consequently due to the fact that this banking sector possesses an incomprehensive view of banking together with a comparatively lagging way of management and a lack of experience, it will be in an unfavorable position to face fierce international competition. Therefore, how one understands operational risk with a view to enhancing the relevant managerial ability has become an urgent problem forthe banks in China and need to be addressed.Due to the above reasons, this essay, in accordance with the relevant spirit of "New Basel Capital Accord", will initially introduces the definition, classification, measuring method and managerial procedure of operational risk. Following this, it will analyse the status quo, together with the reasons for its formation as well as choosing the income model to measure the operational risk of several commercial banks. Finally, by drawing lessons from the successful experience in operational risk of some advanced international banks and combining the experience with the problems with operational risk existing in the Chinese commercial banks, under the principles of being geared to international standards and improving the competitive strength of these commercial banks, the essay will put forward some suggestions for improving the standard of operational risk in our commercial banks from the following six viewpoints:·perfecting the administrative structure of the commercial banks;·establishing a comprehensive managerial framework of operational risk;·strengthening the construction of internal control systems;·choosing suitable measuring methods of operational risk;·setting up a loss database,·reinforcing the cultivation of experts and improving the financial ecological environment.