A Study Of Financial Risk Management On China’s Commercial Banks From ERM Perspective

Commercial bank’s risk management has always been a very popular topic. Andfinancial risk is one of important risks. Commercial banks can operate normaly onlyif they can control financial risk effectively. Currently, China’s commercial baks’ riskmanagement system is not very perfect, while enterprise risk management(ERM forshort) as an international advanced method has been used by some famous foreigncommercial banks. China’s commercial banks should imporve their risk managementsystem based on ERM as soon as possible.This paper classify financial risks of commercial banks according toCAMEL,and analyze financial risks of China’s commercial banks, and then givesome suggestions based on ERM. In addition, this paper also establish a financial riskanalysis model under the method of factor analysis, and selects16listed commercialbanks to2010as research object and11financial indicators in2009annual report asresearch scope, then analyze these data empirically using SPSS. Finally, this paperanalyzes the financial data of China Merchants Bank from2002when ChinaMerchants Bank listed to2009. And then make suggestions for improvement from theperspective of ERM.Through the analysis, we can see that China’s commercial banks have manyhidden dangers. The capital adequacy ratio and mobility should be improved.Especially the state-controlled commercial banks need to focus on bad loan ratio, andjoint-stock commercial bank’s capital adequacy ratio should be improved to a higherlevel as soon as possible. In order to control their risks, China’commercial banksshould be more active to complete enterprise risk management system based onERM----the international advanced risk management method.