Operational Risk Loss Analysis And Precautionary Measures Of ICBC

In recent years, operation risk brings huge losses to the bank, so the study ofoperational risk caused much attention. This paper collects operational risk loss data ofIndustrial and Commercial Bank of China, adopts loss distribution approach to establishmodel, estimates parameters, and gives precautionary measures for operation risk ofICBC to the analysis results.Firstly, on the basis of research results from domestic and overseas, this paperexpounds the basic theory of operational risk, Including operational risk definition,classification, characteristics and measurement methods. Methods used in this paperincludes maximum likelihood method、Bayesian estimation method and Monte carlosimulation. The research provides a theoretical basis for this paper.Secondly, this paper analyzes operational risk of Industrial and Commercial Bank ofChina, collects operational risk loss data of ICBC between2000to2010, makesstatistical analysis, and concludes forming reasons of ICBC’s operational risk, whichincludes control system is not sound, internal regulation is lax, personnel issues, processissues, and information system issues.Then, this paper measures operational risk loss of ICBC, inputs operational risk losswhich is collected, adopts the principle of loss distribution approach, combines withmaximum likelihood method and Bayesian estimation method, obtaines ICBC’s lossdistribution in the future by using Monte carlo simulation, and solves economic capital todeal with operational risk impact to ICBC accordingly.Finally，according to the above analysis, this paper gives precautionary measures foroperation risk of ICBC, which includes to strengthen the bank’s internal control, tostrengthen the training of the staffand and the training of qualified personnel, to accelerated build operational risk measurement model, and to strengthen the externalsupervision and management.