Operational Risk Management&Internal Control

Banking industry is a area where accompany with high risks: How to scientific managethese risks will effect on the risk and fall on the banking industry.Today, the major banking risks can be generally listed into3types: market risk, credit risks,operational risk. Comparatively, the other two risks have been aroused great attention byfinancial institutions, meanwhile, the mature and full fledged risk management frameworkof which have been established. the operational risk has been existed for a long time.however, the commercial bank and its supervision do not see its danger in the bankingdaily work. since1990s,there is a huge number of serious operational fraud cases havehappened in banking industry both in domestic and abroad, which caused great lost to thecommercial banks and produced far reaching effects in the society, the operational risk gotgreat attention and highly recognition from banking industry supervision institutions andacademic circle. Because of the late recognition to the operational risk, the domesticbanking industry has not formed an integrated theory system of the operational risk’sdefinition, clarification, management methods, etc, up to now, most recently, study on theoperational risk mostly follow the research on the thoughts of the market risk and the creditrisk, focus on the quantification models, rarely learn the relationship between theoperational risk and internal control or corporate governance, etc.By reviewing the operational risk in the world and combine basic theories from internalcontrol, study all elements of operation risks. such as: the operational risk’s characters, theoperational risk management status and deep reasons for the operational risk’s disparitybetween the domestic and foreign commercial banks by analyzing the loss data onoperational risk of the domestic and foreign commercial banks, try your every best to find main reason for inducing operational risk in our commercial banks. firstly, this thesischooses four representative-prominent banks to study their internal control practices of theoperational risk, to summer up successful experiences for our commercial banks．Secondly,research on the operational risk of our commercial banks，through the comparation of lostdata of the operational risk in commercial banks between domestic and abroad，getting theresult that the operational risk of our commercial banks mainly lies in the inefficient andincomplete internal control system, then, through the analysis of the internal controlpractices of the operational risk in our commercial banks，the thesis conclude the practicingeffect and find the problems and limitations．Thirdly, focus on the addressing theproblems，learning from the successful experiences of foreign banks，the thesis establishesthe internal control system of the operational risk of our commercial banks，formed arealistic，practical，complete，and integrated framework．All in all，by the research，the thesis achieve a conclusion that setting up the internalcontrol system of the operational risk of our commercial banks is the fundamental way tosolve the problem of the emerging operational and financial cases．...