Research On Measuring Operational Risks Of Commercial Banks In China

From 1990s, endless accidents caused by operational risk led to great loss of commercial banks. And people concentrate on operational risk, which go with the development of commercial banks. In 2004, the New Basel Capital Accord introduced operational risk into the scope of bank’s risk supervision along with market risk and credit risk. The New Basel Capital Accord came up with operational risk measurement methods for the first time. Meanwhile, foreign commercial banks put operational risk management into the most important position. They established a series of measures which consider all the process of daily operation to control operational risk. Foreign academia conducted deep-level researches of metrics and management of commercial banks, and developed a commercial bank operational risk quantification management system.The operational risk management of Chinese commercial banks starts late, and operational risk measurement methods mostly learned abroad. However, there are all kinds of operational risk models. Which one is more suitable to the operational risk capital charges Chinese commercial banks? Will different methods lead to different results of bank Capital Management? These questions are the main points of this paper. This study researches introduce domestic and abroad mainstream operational risk measurement methods and models of commercial banks at present. And combined with the actual operation of the status, basic indicator approach and revenue models are the most suitable models for Chinese commercial banks. Using 16 Chinese commercial banks publicly traded in A -share market from year 2007 to 2013, I introduced the data into the basic indicator approach and revenue models, calculated operational risk of all banks, single banks and state-owned banks, joint-stock, urban cooperative banks. This study researches reflect the overall situation of China’s banking operational risk, and analyze the distribution of operational risk in the banking industry. the research shows that despite the risk level of joint-stock banks and other banks is higher compared to the state-owned banks, at present, China’s management of operational risk is still relatively reasonable and large-scale operating losses is not going to happen from the perspective of a variety of core capital covering operational risk situation.