Risk Management Of Commercial Banks In China Operations

In the development of modern financial industry, operation risk is one of thethree major risks along with credit risk and market risk, the research and managementof the risk began in early21stcentury. During the end of20thcentury and beginningof21stcentury, typical cases such as failure of Barings Bank and misconduct by otherinternational banks have induced Basel Committee to redefine operation risk in’Basel New Capital Accord’. This accord was implemented within Group-10in2006which signifies the international bank industry formally inscribed operation risk intocapital supervision. China Banking Regulatory Commission issued ’13Operation RiskRegulation’ in2005and ’Commercial Bank Operation Risk Manual’ in2007in orderto strengthen commercial bank operation risk management and supervision. However,since our country attend to this field very late, we are in the initial stage of operationrisk management and most of the banks and confronting with change of mechanism.Good risk control culture is yet formed along with the problem of poor historical datacollection. Especially those significant environment and policy changes after theglobal financial crisis, such as domestic macroeconomics went downward, fourtrillion stimulus plan, control of money supply against inflation and control of creditscale, etc. have result in new facets of bank industry operation risk. Operation riskmanagement is exposed to both traditional pressure as well as new ever-changingchallenges.The essay begins with the definition, features, loss category, supervision capitalcalculation and in and abroad research summary on operation risk and then analyzeour country’s commercial bank operation circumstances and characteristics in aspecific case in pro GFC. To reveal a trajectory, main features, presentation, fragiledepartment and business field from traditional operation risk to aftermath operationrisk. On the premise of factor analysis, analysis and measures around operation riskstructure, recognition and appraisal system building,’implant ’ risk control in business procedure, operation risk culture establishment, employee professionalethics education and talent cultivation and so on are put forward. These findingswould come with benefit reference for different levels risk management personnel torealize grim circumstances, discriminate and control operation risk. And furtherpragmatic meaning for strengthening operation risk management in commercialbanks in our country.