Operational Risk Management Research Of Chizhou MS Village Bank

With the deepening development of China’s rural reform, the need of financial services in the aspect of economic development in rural areas becomes increasingly stronger. Now owing to state-owned banks’ more concentration on the business in the city, such as Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China and Construction Bank of China, Rural Credit Cooperatives and post office saving banks seem incapable of meeting effective demands for financial services in rural areas. Under this background, in order to focus on the issues concerning agriculture, countryside and farmers, the rural banks to support emerge as the times require and maintain the sustained and rapid development. However, this leads to higher incidences of financial cases which occurring in the rural banks boil down to lost control of operational risk. As a result, a strong management in aspect of operational risks in rural banks is imminent. In order to find effective ways to reduce and prevent the incidences of operational risks, this paper has probed into the present situation and causes of operational risks. To the paper, operational risks, which exhibit endogenous, universal, asymmetry, and man-made, manifest in the way of internal frauds, external frauds, system errors and errors made in the management of execution, delivery and process. In addition, operational risk management culture, evaluation mechanism, incentive and restraint mechanism and reservation for talent insufficient, internal control system and enforcement system have not been well formed, which reserves to a great potential risk in business operations. Finally, according to what listed above, we draw a conclusion that rural banks in order to improve operational risk management should mainly cultivate a healthy operational risk management culture, improve the internal control system, strengthen the accountability and execution of governors, perfect internal control and risk early warning mechanism and highlighting the key role of talents and external oversight powers.