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Improve internal control legal system to strengthen risk management of commercial banks

Author: LuoHongMei ZhuHongXiang From: www.yourpaper.net Posted: 2010-06-15 05:33:32 Read:
Paper Keywords: commercial banks' internal risk control management
Abstract: China's commercial banks risk factors: new products, has introduced a new business; business operation risk; internal implementation of the restrictive system is not strict; primary person in charge to supervise loopholes Staff can not The rapid development of the business adapt. Recommendations to improve the internal control of commercial banks: the development of rational assessment indicators; sound and perfect the internal transmission of information sharing system; establish reasonable internal control structure; improve the institutional system of the human resources and regulations.
Since the reform and opening up, China's commercial banks risk management systems and constantly improve and raise the level of risk management, but is still a big gap with the international advanced level, major financial frequent cases is an obvious example. The occurrence of the U.S. subprime mortgage crisis, has sounded a warning to the risk management of commercial banks in China. Commercial banks, a good internal control system, that should not have happened can avoid the risk, the risk can be kept in a controlled within a reasonable range.
Current main factors lead to the risk of commercial banks in China
(A) new products, new businesses continue to introduce internal control system can not keep up with the needs of the business development
Currently, under the pressure of fierce competition in the market, the line continues to integrated business system integration, has introduced a new financial business, new products, tend to form a "business first, system lag situation, leading to the emergence of an institutional vacuum, to the bank to bring potential risk.
(B) the risk of business operation more and more
Business operations, the risk arises mainly the following types. First, the operational errors. Employees in business operations, operational risk due to lead to new business are not familiar with, not strong sense of responsibility, and occasionally mistakes. Second, internal fraud. Mainly employees value orientation change when their own needs are not effectively meet the fraud, regardless of professional ethics. Such risks earlier, both the nature of adverse impact, dangers. Third, external fraud. Refers to employees in the process of handling business clients use fraudulently use the potential risk to the bank. Such as forged checks, as well as the growing number of Internet banking fraud. Fraud is the most prominent of China's commercial banks operational risk.
(C) the implementation of the system of internal constraints are not strictly
CBRC promulgated the commercial banks 'internal control guidelines, commercial banks' internal control evaluation Trial Measures "regulations, risk and credit, real estate and other businesses to develop guidelines. Comparison principle of these systems and regulations, some commercial banks, especially the lack of grass-roots line refinement of internal control operating rules, the implementation of the existing internal control system is not strict. In the interests of the drive, some grass-roots organizations on the implementation of the internal control system attitude is not positive, some of the internal control system is the final formality. Some grass-roots organizations in the operating results of the assessment under pressure to deposit legislation, giving priority to efficiency, encountering specific problems, not strict implementation of the internal control system. Some grassroots organizations in order to complete the efficiency indicators, managed to evade the higher level audit. Example, in order to compete for quality customers, some banks are scrambling to provide credit services, ignoring its in-depth analysis of the financial position, resulting in some bad star enterprises ups and downs, causing huge losses to the bank. In real estate loans, do not pay attention to review personal customer credit, or even induced customers gives false testimony, and even some real estate companies in the name of customer cash from the bank, the banks pass on the risk of the real estate market.
(D) of the primary person in charge supervision loopholes Staff can not adapt to the rapid development of business
Characteristics from the financial positions crime occurred, mostly related to the primary person in charge, the reason is that China's commercial banks are currently only at the head office level to establish a framework of corporate governance, grassroots organizations are still one responsibility. Primary agency responsible person shall enjoy the right area dominate the human, financial, and material powers, administrative control excessive concentration of power and lack of effective oversight, the formation of a higher level beyond the reach difficult to monitor at the same level because of the sensibilities supervision weakness, lower-level employees because of their own interests dare supervision situation. The internal audit function fails to give full play to the audit department lacks the necessary independence and authority, can not grasp the overall line of business dynamics and operating conditions, unable to discover the existing problems in the operation, it is difficult to propose targeted and construction of views.
With the continuous expansion of computerized accounting and financial innovation business, commercial banking increasingly complex international business intermediary business, telephone banking client terminal, online banking services, the bank risk control presented a new challenge, and many junior staff are not allowed to grasp new business operation, lack of ability to identify and prevent risks, thus forming the operational risk, especially external fraud risk. Second, improve commercial banks' internal control recommendations
Internal control of commercial banks is the bank to achieve business objectives through the development and implementation of a series of systems, advance prevention of risks, a matter of control, of supervision afterwards and correct mechanism. Internal control of commercial banks in China need to take measures to improve following aspects:
(A) to develop a reasonable assessment indicators, quantitative control operational risk
For a long time, the commonly used measure of corporate pros and cons is the indicator of the return on equity and return on assets, the defects only consider the record profits while ignoring the risk factors. Bank as operational risks in the enterprise, in the measure of the contribution, should be used indicator of the risk-adjusted return on capital is calculated as follows: risk-adjusted return on capital = (profit expected loss) / economic capital. Calculated return on capital indicators, it is necessary to examine the bank's profitability, but also fully consider the risks behind the profitability, help motivate the banks to fully understand the risks and consciously identify, measurement, monitoring and control of these risk to expand their business in a prudent business premise to create profits.
(B) improve and perfect the internal information transfer shared system
Computer system simulation accounting manual calculations, not real database concepts, can not do real-time monitoring, cook the books can not be found. To improve the commercial bank management information system, to ensure smooth information exchange channels on the horizontal, vertical, and to ensure that the relevant personnel have the necessary information. Business people in the system development process to make risk points and the corresponding security control requirements, technical personnel security control requirements of the financial program developed by the design of the program which, for data entry, processing, transmission and storage to a safe inside the computer environment. Develop safety technology standard, automated management of equipment performance, network resources, system resources, and to ensure the security of computer systems and efficient. Conducting financial instruments and financial business innovation, to pay attention to improve their anti-counterfeiting technology content, thereby reducing the subjective violation of the operational staff, the possibility of compressed space of internal fraud and external fraud occurred. Establishment of risk information collection and treatment systems, information collection, information sharing, business processing, data control to achieve fully optimized, so that covers risk monitoring, risk analysis, and the disposal of non-performing assets and risk management aspects.
(C) establish reasonable internal control organizational structure
Strengthen risk management system construction, and risk management departments to participate in surveys since the loan before the post-loan credit business link. Differentiated customer segmentation based on the implementation of business processes to take targeted risk management model. Continue to standardize operational processes, timely detection and correction of errors appear in the business, not only to check business compliance, legality, but also check the construction and implementation of the internal control system; business point of time not only to check the results, but also check processing business process. From compliance oversight to risk oversight transformation, the implementation of the reform of the the vertical internal audit audit audit department is directly responsible for the audit department at a higher level, to establish the relative independence and authority of the audit department, the relevant information in a timely manner to effectively protect the audit department institutionally , comprehensiveness and accuracy of understanding in the supervision and control authority. Adjust and reform the licensing system in the authorization process to adhere to three principles: First, classification management principles, and that the institutions of the same level, according to the same standard assessment after divided into several categories, granted to different management rights, so that each branch operations rights and operating levels match; principle of timely adjustments should be based on changes in the authorized line operation and management of the timely adjustment of authorization, authorize the implementation of better-line reservation or further expand the authorization of poor line should be appropriate contraction until the termination of the authorization; authorize the principle of limited, various branches of the authorization system must be strictly enforced, and acting within the scope and authority allowed.
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