A Study On The Operational Risk Management Of Chinese Bank Based On Business Process Management

Operational risk have become one of the most important fields in bank risk management. Globally, financial institutions have suffered from horrific events that occurred frequently because of operational risk.Basel Committee on Banking Supervision (BCBS) calls for the introduction of bank regulatory capital requirements for operational risk in the New Basel Capital Accord(BIS II).Both External pressure and internal motivity urges global banking industry to improve operational risk management.It is only near ten years that operational risk be viewed as a new kind of risk to management. Research on operational risk measurement is at very infant stage. By analyzing the existed research results, this paper points out the main problems of them. Through deep analysis of specific nature of operational risk, the author gives a new rationale for operational risk management——BPM. Based on it, this thesis aspires to build a new effective operational risk management framework, which could not only offer indirect loss data of operational risk but also offer a set of methods to manage operational risk directly.Chapter 1 is the introduction of this thesis, which introduce the objective and significance of this thesis and also exposit the existed research way in this field.Chapter 2 is a literature reviewChapter 3 discusses the necessity of building the BPM-based operational risk management framework. At present, there are two mainstream study ideals:one is building a operational risk management framework, which is based on the internal control framework, another is using statistical methods to measure the operational risk exposure and the regulatory capital required,which is follow the credit risk management and market risk management ideas. First, this chapter summarized specific natures of operational risk, which include:1, operational risk is one-side risk; 2, operational risk is endogenous risk; 3, complexity, diversity and universality; 4, context-dependence; 5, the loss of operational risk is indirect; 6, the factors lead to operational risks can be located accurately.Based on these characteristics, this paper argues the two mainstream study ideals have limitations in the theoretical basis, data sources and research perspectives. To overcome the shortcomings, a new operation management frame work should be built based on business process management theory.Chapter 4 discusses how to build the BPM-based operational risk management framework. This framework is consist of two levels. The first layer is to establish a highly efficient business process management system(BPMs) that allows business process dominance, clear,which includes two aspects:First, building a process-based organizational structure; second, a matching information system should be established. Second layer, based on the quality management theory, the PDCA process cycle can be used to improve the quality of business process, which includes:P:in the process design phase,the process simulation could maximize the quality of process design; D:in the implementation phase of the process, the process monitor could timely detect the operational risk and remind the implementation and risk management processes; C:in the check phase, by analyzing the process running data, the framework is able to offer indirect loss data to measure operational risk and to find out which factor leads to it; A:in process re-design phase, by standardizing the sophisticated and effective process, this framework can improve flexibility of processes.