On joint-stock commercial banks, small and medium overall risk management

Abstract: China Banking risk management research and practice late compared Dinner, basic long stay in the stage of implementation of internal control, risk management, but also to understand the main emphasis on the credit risk management, and from the international and domestic financial practices development process point of view, a comprehensive risk management model is a commercial bank survival and development of the inevitable choice for small and medium sized joint-stock commercial banks in financial theory and practice of the process of rapid development and change to improve core competitiveness, we must study and learn the international and domestic well-developed banking sector practical experience in risk management, internal control phase as soon as possible from a comprehensive risk management phase transition, build viable comprehensive risk management framework.

Paper Keywords: small joint-stock commercial banks, risk management, internal control

An internal control and definition of the concept of comprehensive risk management

(A connotation of internal control
1992 << COSO Internal Control - Integrated Framework >> Lieutenant internal control is defined as a corporate board of directors, management and other personnel to achieve process designed to provide reasonable assurance that the following objectives: reliability of financial reporting, effectiveness and efficiency of operations, compliance of laws and regulations. internal control should have five elements: internal control environment, risk identification and assessment, internal control measures, information exchange and feedback, monitoring, evaluation and correction.

(Two connotation of comprehensive risk management

Comprehensive risk management framework COSO << >> (2004 is defined as: a comprehensive risk management (ERM is a process and this process is affected by the Board of Directors, management and other personnel effects and this process has been developed from the corporate strategy throughout the enterprise events in order to identify those potential events that may affect the business and manage risks, ensuring enterprises to obtain the established objectives.

(Three internal control and risk management, internal relations

1 Internal control and comprehensive risk management there are some differences: both areas are inconsistent, both activities are inconsistent, both measures of risk are inconsistent.

(2) a comprehensive internal control and risk management are closely related: Internal control is a necessary part of a comprehensive risk management, internal controls, driven by enterprise risk awareness and management, comprehensive risk management covers the internal control from the COSO framework for comprehensive risk management and internal control framework can be seen, in addition to a comprehensive risk management including internal controls three goals, but also increased the strategic objectives, a comprehensive risk management 8 elements in addition to including all five internal control elements, but also increased the goal setting, event identification and risk measures three elements of a comprehensive internal control and risk management should be done by the same set of business organizations and their staff to complete, companies can set up two working groups to whom this end, companies set up in the organization , the distribution of powers and responsibilities of personnel should be fully professional exam management, internal control and risk management responsibilities of these three categories of complementary and they should be the key job responsibilities of each of the organic component.

Although the internal control and risk management point of departure for a comprehensive and specific goals are not identical, but both connotations inherent in the concept of consistency in the protection of enterprises to achieve the overall goal of sustainable development in the process, and the role of both the fundamental goal is consistent, so both should realize the organic integration of comprehensive risk management framework construction and implementation of internal control should be established on the basis of existing achievements.

Second, China's small and medium commercial banks to implement fully the necessity and importance of risk management

(A risk factor faced by financial institutions diversify
Financial institutions diversify risk factors, including credit risk, market risk, operational risk, liquidity risk, reputational risk, legal risk, strategic risk and country risk. Banks are due to improper risk of loss control measures, some Case lost huge amount of money, small and medium commercial banks in terms of their relative lack of anti-risk ability, more systemic risk caused by the loss,

(Two small and medium commercial banks' internal control systems there are more drawbacks

Levels of lateral head too much power for the occurrence of operational risk to provide a space that most banks did not establish an independent specialized departments under the operational risk management and allocation of capital duty, the current management of operational risk management methods and means backward, difficult to reflect The Bank's overall operational risk level and distribution structure, with the international requirements to capital constraints as the core of operational risk management gap is not small.

(Three ignore the linkage between risk

Currently single, fragmented handle all types of risk, ignoring the linkage between risks.

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Third, the domestic banking sector status of implementation of comprehensive risk management

(An Industrial and Commercial Bank of China, Bank of China and other large commercial banks to establish a comprehensive risk management governance structure
Such as Industrial and Commercial Bank of China in 2004 introduced the concept of COSO ERM framework, in accordance with the modern financial corporate governance standards established by the shareholders' meeting, the Board of Supervisors and senior management consisting of a comprehensive risk management governance structure, the development of relevant authorization scheme, the formation of authority decision-making body between supervisory bodies and senior management roles, coordinated operation of effective checks and balances mechanism to re-adjust the Risk Management Committee, and in July 2006 established the Chief Risk Officer, to carry out a comprehensive risk management provide an institutional guarantee.

(Two part of the bank's overall risk management implementation plan has been formed and gradually advancing

Agricultural Bank of China in the development of the new Basel II implementation plan based on the development timetable for implementation of the new Basel Capital Accord, the steps and measures to be completed before the end of 2009 IRB law system, built before the end of 2013, the IRB advanced approach system. ICBC comprehensive promote the development of risk measurement techniques, increase data set and system construction, from corporate governance, methodology, basic data, system policies, IT systems, etc. deepening the implementation of the new Basel Capital Accord, risk governance structure has improved, the level of risk measurement gradually with international standards, risk management, forward-looking, science can be significantly improved.

Fourth, build SMCBs comprehensive risk management framework proposal

Combined with domestic and foreign commercial banks, comprehensive risk management organizational structure construction experience, joint-stock commercial banks to small and medium commonly practiced total branch-administrative system based on the author proposed according to the "centralized management and control, matrix distribution, full coverage, full participation," the objectives and requirements , the establishment of a branch three linkage total risk management mechanism to centralize the functions of risk management department for the characteristics of Chief Risk Officer as a link in order to spread the risks of each business line manager based architecture and functions of the division.

The Board consists of the Risk Policy Committee, which primarily determines risk appetite indicators and provide policy advice, the senior management has established a risk management committee, served as chairman of the president, vice-chairmen held by the governor in charge of the other line-level leadership as the Standing Committee, set up a permanent establishment of the Risk Management Committee - Risk Management Department as the actual implementation of the risk management department, which focus on all types of risk management function, you can set including credit risk, market risk and operational risk teams, Appointment of various risk manager, may also need to set the strategic risk and reputation risk management team, set up risk management director, risk management services for comprehensive coordination, risk management director to work closely with the Chief Financial Officer, directly reporting to the board and senior management work in all business lines set risk manager post, on the one hand with the business lines responsible for risk control, the other is for the risk management department in the business line are dispatched units responsible for risk data collection, risk status real-time monitoring, risk managers were dispatched to establish branches, risk managers stationed risk management branch level is the main force of the branch's credit risk, market risk and operational risk management, regularly up a Risk Management Department reports on the situation of risk management , to provide risk information and data.

Small joint-stock commercial banks in the existing basis of internal management level, learn the advanced experience of the West Bank, so as to establish a comprehensive risk management framework and functions that will help promote small and medium commercial banks with international standards, the fierce competition in the future truly sound operation and sustainable development.

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