Commercial Banks Operational Risk Management And Control Practices

Although operational risk came along with the birth of banks, research and exploration on operational risk in theoretical and financial field started much later than credit risk and market risk. Operational risk events causing significant financial losses in the international banking community during 1990’s finally aroused the attention of commercial banks and regulators on operational risk. In 2004, Basel Committee on Banking Supervision formulated the new Basel Capital Accord, in which operational risk was also included in the provision of venture capital and scope of regulation, giving operational risk equal status with credit risk and market risk. For domestic commercial banks, management idea, mechanism and methods all lag certain gap compared with foreign first-class commercial banks. Frequent happened major risk cases of commercial banks not only damages commercial banks’ image in a certain degree, but also reduces the overall credibility of China’s banking industry. There is major theoretical and practical significance in strengthening the operational risk management of commercial banks.In the aspect of theory, on the one hand, this thesis described in detail the definition,characteristics, causes and capital measurement requirements of operational risk based on the Basel committee’s research; on the other hand, the author reviewed the research and practice process of operational risk of CBRC, introduced operational risk management status and considerable progress of China’s commercial banks, interpreted important document on operational risk management and capital metering guidelines issued by the CBRC.In the aspect of practice, the author analyses the statistics of all 3508 operational risk events of bank A during the year 2010 to 2014. The author pointed out distribution situation of operational risk in 7 main sectors, ie. individual financial sector, electronic banking sector, credit card sector etc.on the basis of a large number of first-hand data,assorting operational risk events by business line, region, type of risk, level of impact, in accordance with the requirements of Basel II. At the same time, the author analyzed the reason and development trend of operational risk events, gave suggestions from operational risk management and measurement aspects.The study of the author has important reference value on strengthening operational risk management, not only for bank A, but also for all domestic commercial banks.