The Research On Influence Factors And Management Of Operational Risk In Commercial Banks Of China

Since the 70s of the 20th century, with many international top banks such as Barings, Daiwa Bank failure, the banking sector and regulatory authorities realized that there still exist risk related to failed internal processes, people and systems or external events in addition to credit risk and market risk, which was defined as operational risk(OR).After the introduction of BaselⅡ, China Banking Regulatory Commission issued a series of documents about OR in the domestic banking,which stressed the importance and the urgency of OR.The coverage of OR is wide,and factors are complex and interactional.In the condition of lack of OR losses database and experience of risk measurement,it is difficult to manage.OR in China is much more serious than international counterparts, so the priority is to find the risk factors and choose appropriate OR assessment tools to help enhance the OR management(ORM).Taking account of status of OR in China's commercial bank and difficulties in measurement and management,this paper establish a risk influence factor system from aspect of human , process, system, external and institutional factors to cover OR in China's commercial banks,which based on the Basel Committee and the British Bankers Association.The factor system has 4 categories and 21 indicators.Among them, Human factors including risk awareness, quality of personnel, work excuses, financial corruption, internal fraud and workload; Institutional factors including property system, corporate governance, internal controls, organizational structure, incentive and personnel policies; Process and system factors including process design, process implementation, system design, system vulnerabilities, information security and technology development; External factors including banking supervision, market discipline and external fraud. Then, taking into account the mutual influence,use the ANP to analysis,quantify and rank the factors,then compare and analyze OR extent in different types banks.From the result,we know that the largest OR factors is human factors,and the most important single indicator is the internal control.Based on ORM theory and international active banks ORM practices,the ORM strategies was given from two aspects:Internal environment building in banks need to improve through the improvement of internal controls and corporate governance, building Process Bank and other measures; External environment building need to improve by strengthening supervision and to advance the role of information disclosure.So as to establish long-term mechanism in ORM.