A Comprehensive Risk Management System, Improve China's Commercial Banks

With the development of financial globalization and under the overall and open new environment of financial market of our country, risks which the commercial banks of our country face become diversiform, complex and global day by day. Potential losses are caused by many kinds of risks which influence each other. Thus, it leads to prominent changes in the risk management of commercial banks. It includes changes from changing single credit risk management to the adoption of the credit risk, market risk, operate risk all the time, to the adoption of the management of credit asset and uncredit asset, resetting up the procedure of organization and the innovation of technological means. It's the Enterprise-wide Risk Management, that is, ERM. Basel II (2004) put forward clear requirements of identity, measure and control of the risk of bank to offer a new standard for commercial banks to set up and improve risk management system.In the process of the reform of shareholding system, we preliminarily set up the framework of the risk management, and began to implement the system of ERM, and got certain effect in the aspect of forming the system of ERM, improving the quality of capital and risk inspection. But comparing with the foreign banks, it also has certain disparity in the organizational structure, precautionary sense, control means and the basis of risk management system. The former pay attention to horizontal management while the latter to vertical management; the former pay attention to prevention while the latter to post-relief; the former have excellent management structure while the latter still need to improve the internal control system. Meanwhile, it has certain disparity from the requirement of Basel II.Influenced by planned economy system, commercial banks of our country are marked by profound traditional system in the aspect of property system, internal operation system, organizational structure and management system. Besides, the development of capital market is not mature, and the social credit system is still unestablished. Our commercial banks face problems and difficulties to set up and improve ERM system. First, the legal person management structure that is appropriate to the requirement of the modern bank system has not been completely established, and the accordant system of self-control and self-development also needs to be improved. Second, the internal control is mainly post-management, it lacks prevention and inner monitor and it doesn't aim at risk and interest, thus, it lacks ERM and advanced risk management means. Third, capital adequacy system and performance appraisal system still need to be improved.Based on the reference of advanced foreign banks and Basel II, we should take measures to improve the commercial bank risk management of our country as follows: First, we should clarify property structure, improve the management system and the internal control system. Second, we should improve the risk management structure and set up RAROC-centered economic capital management and accordant system. Third, we should establish risk management system which combines hard control and soft control, and furthermore establish economic ecological system, which can provide a good market environment for the establishment and improvement of ERM system of commercial banks of our country. Thus, it can advance the stable development of commercial banks of our country with the financial globalization and under the overall and open new environment of internal financial market.