Operational Risk Management Of Rural Cooperative Financial Institutions

In2007, the CBRC issued amended<Regulation Governing Capital Adequacy of Commercial Banks>. In2011, the CBRC issued<The Guidance of New Governing Standards for Chinese Banking by CBRC>. According the document, systematically important banks and non systematically important banks should conform to the new standards till2013and2016separately, which manifests the determination of promoting the Basel3by CBRC. It’s the new challenge for Chinese banking that influences consciousness and management of credit risk, market risk and operational risk deeply. The rural cooperative financial institution has enforced the management of credit risk, but poorly in operational risk. Since operational risk is closely related much fields of bank operating, it is hander to collect and process operational risk data than credit risk and market risk. In virtue of the lack of strategy and framework, construction of risk management system of rural cooperative financial institution obviously has fallen behind more serious situation of operational risk, compared with implementation of capital adequacy and economic capital relying on external governing. Differing form mature experiences in the model of credit risk and market risk, rural cooperative financial institution must find the suited risk management system and compatible reform direction step by step, of which is different from state-owned bank in system, framework, management, and technology. Therefore, the writer analyses the characteristics, performances, and originals empirically, proposing strategy and suggestion of operational risk management, which including construction of modern corporate governance structure, compliance culture construction, building of enterprise-wide risk management system, reform of process bank, improved audit supervisory function, building database of operational risk loss, and attraction of strategic investment, against unsound governance structure, weakness of enterprise-wide risk management, faulty internal control, lack of operational risk management system, and shortage of incentive and restraint system.