Comparative Study On Operating Risk Between Foreign And Domestic Commercial Banks

Over the years, the main risks which the banks face are market risks and credit risks. And through long-term theoretical researches and technological practices, there has resulted in a series of management system and techniques, which are relatively natural and effective. However, since the 19th century, frequent operational risk events have caused huge loss of the commercial banks around the world, and even affect the sound operation of the banking systems in some countries. Then the banks started to pay attention to the operational risk, which is one of the three main risks which the banks face.From an international point of view, the banks' attitude on operational risk has experienced a long process, which started from neglect, and ended with comprehensive operational risk management. In fact, the loss caused by the operational risk has been larger than that caused by market risk and credit risk. Since the late 20th century, the researches of operational risk have been deepening. The New Basel Capital Accord, which was issued by Basel Committee in June 2004, brings the operational risk into the risk management framework and even requires banks taking operational risk into account when calculating the economic capital. On March,2005, China Banking Regulatory Commission published the Notice of CBRC on Enhancing Operational Risk Control, and required banks to keep away and control operational risk.This paper based on the study of operational risk management, by the way of comparative analysis, summed up the strengths and weaknesses of China's commercial banks in the operational risk management. According to the study, we put forward some practical strategies and advice.Firstly, the paper gives a summary on the qualitative evaluation of the operational risk management process and the quantitative evaluation of the management results. Then, carry out a comparative analysis, between the foreign banks and the domestic banks, from five fields, such as the concepts of operational risk, the management, characteristics of the loss data, the measurement and regulation.