Research On The Risk Management Of Commercial Banks' Private Bank Operation In China

With the rapid development of China’s economy and increasing number of rich people, private banking business emerges. Since the rise of private banking business, as the innovative financial services provided by commercial banks, it shows a diverse, localized and professional developing trend. Although we celebrate the remarkable achievement in private banking, meantime we also find out that there are a large number of risks. Among them, operational risk is the most complex and most difficult to control. To ensure the healthy development of private banking business, it needs to be managed effectively.This paper uses literature research, qualitative and quantitative analysis,other methods to carry out research on private banking operational risk management. It starts form China’s real situation when private banking business launched, and defines operational risk in the light of the characteristics of private banking. In addition, with the case examples focusing on internal fraud and external fraud, two main form of private bank operating risk, this paper discusses the issues around China’s private banking business from the perspectives of internal prevention and control mechanism, risk management culture, personnel and regulatory, etc. Moreover, this paper references the three tools of operational risks management, and learns form the Dutch and HSBC private banking practice, considers risk identification, assessment and measurement, risk control, monitoring and risk reporting process in order to provide ideas for the prevention and control of the operational risks. Finally it puts forwards some policy recommendations on operational risk management,such as: building the complete internal prevention and control mechanism,strengthening the construction of operational risk management culture,increasing investment of operational risk control, improving the private banking system environment. Through the above discussion, this paper aims to providea new perspective for the management of the private banking operational risk,hoping to contribute to a better future of private banks.