The Development and Prospect of Operational Risk Measurement in China’s Commercial Banks

Abstract

With the development of various businesses of commercial banks in China, operational risk has become one of the main risks faced by commercial banks. Meanwhile, the international management methods for operational risk of commercial banks include Basic Indicator Approach, Standardized Approach, Advanced Measurement Approach, and the latest standard measurement Approach of Basel Association. Although many metrics have been produced internationally to control the operational risk of commercial banks, the operational risk management of commercial banks in China is still relatively backward. By comparing the development of China's operational risk management with the international advanced level, it can be found that China's operational risk management still has the problems of insufficient awareness of operational risk hazards, backward operational risk management mechanism and insufficient risk loss data, etc. China's commercial banks should raise the awareness of operational risk as soon as possible, update the metrics for controlling operational risk and establish in this regard China's commercial banks should raise the awareness of operational risk as soon as possible and update the measurement methods for controlling operational risks and establish their own risk data to improve operational risk management.