On The Operational Risk Management For Commercial Bank Of China

Operational risk is one of the oldest risk, which is accompanied by the rise of the banking, however, it was taken seriously just in a matter of recent two decades. Having occurred in the1990s, the British Barings Bank and the Bank of Japan’s bankruptcy, and the scandal of the loss of nearly5billion Euros of French bank Societe Generale in2008can be attributed to negligence on the prevention and management of operational risk. Operational risk has become another important operational risk faced by commercial banks following the credit risk and market risk.In2004, New Basel Capital Accord firstly added operational risk into the context of capital regulation, asking banks to prepare operational risk capital charge. Foreign banking sector already began to actively explore the method of operational risk management and the measurement model. In contrast, China’s research on operational risk is still shallow, and the operational risk management of commercial banks is generally on a low level, so it is an urgent need to set the relative scientific operational risk management system. This paper, by the study on operational risk, wants to give commercial banks of China a reference.Based on collecting the research results in nearly two decades of the Basel Committee as well as many domestic and foreign scholars on the operational risk of commercial banks in China, this paper does specific studies by methods of the combination of the theory and empirical, the comparison and analysis. The article is overall divided into three parts. The first part is the identification and discrimination of operational risk with major issues such as the definition and classification of operational risk; second part is the measurement of the operational risk of commercial banks mainly through quantitative analysis, analyzing the basis and applicability of the model of the operational risk measurement, then using the Basic Indicator Approach to measure the operational risk of parts of the listed banks and the impact on the capital adequacy ratio; the third part is to give China’s commercial banks recommendations on risk management by learning from foreign advanced operational risk management experience.