Research On The Operational Risk Prevention Of Chinese City Commercial Banks From The Perspective Of Corporate Governance

Commercial banks occupy a dominant position in the overall financial market.Not only are they the mainstay of financing in the national economy,they are also an important link in the implementation of macroeconomic regulation and control policy and in playing a macro-regulatory role.However,as the banking industry is inherently a risky business,risk events that erupt from commercial banks are more widespread and devastating than those from general industrial and commercial enterprises.As an institution providing financial services to local residents and SMEs,city commercial banks are an integral part of China’s banking system,and the soundness of their operations has a great impact on the development of China’s banking industry.Compared with credit risk and market risk,academia and commercial banks once lacked sufficient attention to operational risk,which is the source motive of various risk events,until the frequent outbreak of various operational risk events,operational risk gradually became the focus of attention in the global banking industry due to its destructive power and the large coverage.Due to the environment and historical reasons,operational risk incidents and regulatory penalties of city commercial banks in China have been increasing in recent years,reflecting that there are still more serious problems in operational risk management of city commercial banks.Due to the highly artificial and endogenous nature of operational risk,the management of operational risk in city commercial banks relies more on the continuous optimisation of bank management than on improving capital adequacy ratio in order to fundamentally control the occurrence of operational risk events.Therefore,corporate governance that effectively coordinates the behaviour and relationships between shareholders,the board of directors,senior management and other stakeholders through the development of internal and external decision-making,incentive,monitoring and control mechanisms is of great importance.Against this background,sound corporate governance has become an important entry point for city commercial banks to effectively prevent operational risk and has become an urgent issue for city commercial banks to address at present.Based on authoritative literature and previous research,this paper will use the case study method and comparative analysis method as the research method,and take the solution of practical problems as the starting point to discuss in depth the mechanism of the influence of corporate governance on operational risk and the suggestions for optimising operational risk prevention of JS banks based on corporate governance from the perspective of corporate governance,which is also the focus of this paper.Through extensive literature search,data analysis and case study work,this paper firstly,clearly reveals the logical relationship and influencing mechanisms between operational risk and corporate governance,and clarifies how corporate governance mechanisms influence operational risk management in commercial banks,i.e.how these mechanisms act on operational risk and how operational risk can be effectively reduced.Theoretical and structural support is provided for making recommendations.Secondly,this paper collected data from 46 domestic listed banks including JS Bank(including 6large state-owned banks,10 national joint-stock commercial banks and 30 city commercial banks)and conducted an in-depth analysis on their corporate governance,operating performance and operational risk events to show the current situation and problems of working governance of JS Bank and city commercial banks through data comparison.Although the data collected in this paper cannot cover all commercial banks,the sample is larger than that of previous studies on corporate governance and operational risk in city commercial banks,and the data are mostly extracted manually from annual reports.In addition,in order to make more forward-looking and actionable recommendations,this paper introduces and compares and analyses the current major corporate governance models around the world,and compares and summarises the corporate governance initiatives and experiences of large international banks in preventing operational risks,with a view to providing references and lessons for the optimisation of corporate governance in Chinese city commercial banks.Based on the above research work,this paper will not only enrich the research on the logical relationship between corporate governance and operational risk management in city commercial banks to a certain extent,but also provide reasonable and effective suggestions for JS Bank and even city commercial banks to identify the corporate governance tools that can effectively reduce the occurrence of operational risk losses and promote the sound operation and development of the banking industry.In this study,there are two main innovations.The first is the innovation in research perspective.This paper examines the impact of corporate governance on operational risk prevention from the perspective of internal and external two-tier mechanisms.Not only does it analyse internal mechanisms such as shareholding structure,board characteristics and senior management incentives,but it also conducts an in-depth study on the impact of external governance mechanisms on operational risk based on previous research,taking internal and external mechanisms into account and ultimately proposing recommendations for prevention and optimisation.The second is innovation in research content.In order to put forward scientific and reasonable prevention and optimisation recommendations,it is necessary to clarify the inherent logic of the relationship.Only in this way can a solution be found at the root of the problem.In terms of research content,this paper not only analyses and proposes the logical relationship between corporate governance and operational risk in commercial banks,but also summarises the mechanism of the four internal mechanisms of corporate governance and three external mechanisms on operational risk,which provides strong theoretical support for the subsequent analysis of the corporate governance issues behind operational risk and proposes solutions.Due to limitations in terms of effort,knowledge and data,there are many shortcomings in this study.As a researcher and practitioner in this field,this paper hopes to propose optimisation recommendations that can be applied in practice to solve practical problems through my own analysis and research.I think this is the social responsibility of a researcher and practitioner,and the real value of our learning.