Research On The Operation Risk Early Warning System Of Commercial Banks In China

Commercial bank is a high-risk industry. Business risks are throughout the whole process of commercial bank management activity. How to effectively in risk management to ensure sound operation of the banking industry is hot and difficult issues facing the current international financial industry. In2007, the subprime crisis caused by the global financial crisis puts forward more challenging in commercial bank management risk early warning. In China, the commercial banks are in rapid development stage, facing the complexity of the business risks, and early warning system is not perfect. The early warning system pays more attention to the muddle monitoring and remedy, and neglects the advance warning. Therefore, research on commercial bank management risk early warning system has the vital significance since providing theoretical basis for Chinese commercial bank risk management.This paper focuses on early warning system of commercial bank management risk in China. Firstly, this paper elaborated on the theoretical basis and practical significance of early warning system of China’s commercial bank operation risk, and reviewed the research status at home and abroad. Secondly, this paper summarized the overview of the operating risk of commercial bank basic theory, analyzed main content of the early warning system, and from four aspects of the capital adequacy, asset quality, liquidity, profitability, this paper the focused on the present situation of operating risk of our commercial banks, analyzed the causes to commercial bank management risk, on this foundation, put forward the necessity to build early warning system of commercial bank in our country. What’s more, the paper establishes a measure index system to manage the risk of commercial bank, and determined the warning interval by using "3Sigma" law, this paper divided the forewarning degree into four levels, light police, medium police, huge police. Fourth, this paper manages the risk warning degree according to the general score determined at different stages of the commercial bank. Fifth, combined with the convergence of genetic algorithms and neural network BP (Back-Propagation Neural Network) adaptive capability, this paper prediction makes a BP neural network early warning model based on genetic algorithm. Finally, based on19half-yearly date from China Merchants Bank, this paper testified the effectiveness of early warning system on commercial bank risk management, and the result showed that the system is suitable for early warning management of commercial bank in China.