Dissertation > Economic > Fiscal, monetary > Finance, banking > China's financial,banking > Banking system and business

Research on Operational Risk Management System of Bank A

Author WangLei
Tutor WangZiLiang
School Shandong University
Course Business Administration
Keywords New Basel Capital Accord Operational Risk Operational Risk Management Operational Risk Management System
CLC F832.2
Type Master's thesis
Year 2011
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Bank A is a’Agriculture, farmers and rural areas’oriented large-scale joint-stock commercial bank, with branches over major cities and towns and highly involved in international trade and business comparing to other commercial banks, Bank A advantages in their branch networks all over cities and even countryside, however, its relatively out-of-date management and operating system cannot catch up with its oversized structure expansion. In recent years, Bank A has become a listed financial group which largely improved the way of financing and its business. With new financial products and derivatives being introduced and brought into market, Bank A has become competitive towards other banks.In the context of rapid developments, Bank A has drawn great attention to the operational risks co-existed with its development as problems of lack operational risk prevention and internal control system have been revealed. Managing operational risks and establishing a good risk management system is the only way to reduce risks of commercial bank losses, and in the mean time to increase their profitability. Thus, it is necessary to implement an improved operational risk management system.This thesis begins by introducing the concept of the operational risks of commercial banks-from the origin of the concept to the specification in the governance framework of the New Basel Capital Accord, and then extended to the current governance and assessment of operational risks of commercials banks. Secondly, classical cases of overseas banks were introduced to reveal the developments of operational risk management and implements, and then ended with a simple conclusion on their best practices. Subsequently, through an in-depth analysis of Bank A’s operational features, problems and risks of the business development, operational risk systems, corporate culture construction, and quantitative management will be revealed. The reasons of the problems will be distributed to four aspects:property rights arrangements, external factors, management performance, and management system constructions. Then advices are given to Bank A to improve its own management systems based on its features.Finally, based on the commercial bank risk management theory and the 10 principles from Basel, combined with Bank A’s actual operating characteristics and its problems in operational risk prevention and control, research and studies are carried out to help establishing Bank A’s operational risk management system in the following 5 areas:1. Establish an operational risk prevention strategy to guarantee the maximum of shareholders interests.2. Raise a corporate culture and internal control system to support the operational risk management.3. Improve the organization structure including the risk management organizations.4. Develop and improve software and systems related to risk management.5. Improve the business continuity management of Bank A, and make a more complete operational risk management system.

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