For city commercial banks, it is an urgent task to introduce the advanced operational risk management concept of international banking and form a good corporate culture atmosphere for risk control. To establish a good cultural atmosphere of operational risk control, we must first make clear the scientific meaning of operational risk and the means and methods of risk control.
Modern bank risk management theory gives a clear definition of operational risk, that is, operational risk refers to the danger of direct and indirect losses caused by internal processes, personnel behavior and system misconduct or failure, as well as external events. Operational risk mainly comes from internal control and external events, including personnel risk, system and process risk, technology risk and operational strategy risk.
The prevention of bank operational risk mainly depends on perfect internal control, which is the main means to effectively implement bank operational risk management. Basel Committee on Banking Supervision 1997 put forward in the Core Principles of Effective Banking Supervision: "The most important operational risk lies in the failure of internal control and corporate governance mechanism". According to the Definition of Internal Control of Commercial Banks issued by the People's Bank of China in September 2002, internal control of commercial banks is a dynamic process and mechanism for commercial banks to prevent, control, post supervision and correct risks in advance by formulating and implementing a series of systems, procedures and methods.
Similar to other domestic commercial banks, Jinzhou Commercial Bank paid attention to the expansion of assets and the improvement of market share in the early days of its establishment, in order to gain a place in the regional banking market and complete its initial survival and development needs. At this stage of development, banks' risk awareness is still in its infancy. Although all managers and employees can realize the importance of risk, there is a lack of effective means and scientific methods to control risk in the system. With the increasingly fierce competition and the deepening of bank risk supervision requirements, the management deeply recognizes the need to form a corporate culture of risk control, establish a scientific risk management and internal control system, and combine advanced risk control means and methods with the bank's own operating characteristics to achieve "practicality, effectiveness and practicality", thus comprehensively improving the bank's risk management level.
Jinzhou Commercial Bank introduced scientific bank operational risk management concepts by implementing risk management and internal control projects, and strengthened the training of internal control and operational risk management concepts and methods for management and employees. Within the bank, risk management should be changed from profound theory to the conscious awareness and behavior of all bank employees, so that all bank employees from top managers to grass-roots employees can accurately understand the content and meaning of internal control and operational risks, and clearly understand the relevance of internal control and operational risks to each employee. Through training, employees have further clarified the control methods and means of different post risks, so as to control risks reasonably and effectively.
While strengthening the publicity and training of the concept of internal control and operational risk, the project team redesigned the original performance appraisal and salary system, and integrated comprehensive risk management including operational risk management into it, making internal control and risk management not only the requirements of employees' daily work, but also the cost factors to measure the performance of the department, which directly affected the results of departmental operational efficiency assessment, and then formed an incentive mechanism for managers and employees' risk management. Through pre-training, in-process supervision and post-evaluation, the concept of bank internal control risk management has been deeply implemented in every employee. I believe that through a period of implementation, a good corporate culture atmosphere of internal control risk management will be formed.
The second is to further improve the organizational structure and post responsibility system of risk control.
Perfect organizational structure is the organizational guarantee to ensure internal control and risk management, while scientific job responsibility design can ensure that each employee has a clear division of rights and responsibilities in internal control and risk management, and then ensure the effective implementation of division of labor through reasonable performance appraisal and incentive mechanism design. Combining the scientific ideas and best practices of internal control and risk management, the project team reformed the organizational structure and redesigned the post responsibilities.
A good corporate governance structure is the basis and premise for commercial banks to establish an effective risk management system. Jinzhou Commercial Bank pays attention to strengthening bank governance, strengthening the functions of shareholders' meeting and board of directors, and improving the awareness of internal control and risk management from the source. In this project, the functions of the board of directors and committees have been further strengthened to ensure that the board of directors can really play a role in major bank decisions. While improving its original functions, it will set up an Assets and Liabilities Management Committee, an Audit Management Committee, a Nomination Management Committee, an Information Management Committee and a Strategic Development Committee to further strengthen the internal control of banks.
In the project of risk management and internal control, Jinzhou Commercial Bank strengthened the functions of risk management department and audit department. Vertical independent and authoritative risk management organization mechanism is the organizational guarantee to strengthen risk management; Perfecting the supporting risk management mechanism is the necessary means and supporting measures of risk management. In order to comprehensively and effectively carry out risk management and establish an independent risk management system, it is directly led by the board of directors and senior management of the Bank, with an independent risk management department as the core and close contact with various business departments. The Risk Management Department is responsible for the overall management of bank risks, including credit risk, market risk and operational risk. The Risk Management Department uses a variety of management methods including policy constraints, process specifications and effective quantitative support tools to implement risk management and control all kinds of risk losses within an acceptable range.
Jinzhou City Commercial Bank pays attention to the role of supervision and control through the internal audit department. By establishing a highly authoritative and independent audit department of the whole bank, its functions as an important internal control supervision department in internal control evaluation and supervision will be further enhanced. The Audit Department is the highest audit management department of the Bank. It is responsible for supervising and auditing all the operating institutions and business management departments under the Bank, and is directly responsible to the Board of Directors and the Audit Committee. At present, the headquarters is beginning to classify the risks of its subordinate institutions, and adopt different audit methods according to the risk levels of different institutions to strengthen the audit of institutions with greater risks. After the adjustment, the Audit Department has greatly improved the audit strength and effectiveness in supervision and audit.
Third, establish a scientific internal control, risk management system and process system.
Scientific and effective management system and process system are the basic guarantee to ensure the quality of internal control and risk management. Jinzhou Commercial Bank has established an internal control system conducive to comprehensive risk management by improving the internal control system of various departments and businesses, optimizing risk control processes, reducing and preventing operational risks, applying systematic and standardized management methods to operational risk management of various businesses, and comprehensively sorting out various business processes.
In order to better reflect the independence of risk management, Jinzhou Commercial Bank separated the risk management line from the original single business line, established a risk manager system, and assigned a risk manager for each branch to conduct a comprehensive review of the risks of each branch. The risk manager is managed by the risk management department, not subordinate to each branch, so as to avoid ignoring risks driven by economic interests. Through the implementation of the auditor system, the auditor is responsible for on-site and off-site inspection of internal control and operational risks in the operation of sub-branches, and determines the on-site audit frequency according to the different internal control management levels of sub-branches.
The project team designed a risk information reporting and evaluation feedback mechanism. The purpose of establishing a risk information reporting mechanism covering the whole bank is to provide all kinds of risks and internal control involved in bank operation and management to decision-makers and management in a timely, comprehensive and complete manner, so as to find, prevent and resolve operational risks in time and ensure stable operation. The path of risk report adopts the matrix structure of vertical submission and horizontal submission, that is, the department or branch must submit the risk report to the corresponding management department at the same time. The purpose of establishing a system evaluation feedback system is to discover, report and correct the defects of internal control in time, and constantly improve the adaptability and operability of rules and regulations, thus increasing the control ability of grass-roots institutions.
At the same time of system design, Jinzhou Commercial Bank further optimized the original risk management process system. In the design, the approval process including the loan approval process is reduced, and the risk responsibilities from the account manager, risk manager and final approver are further clarified. Due to the introduction of advanced risk control methods, although monitoring links are reduced, the transparency of information transmission is improved, and the incentive and restraint mechanism is directly related to risk responsibility, thus improving the quality of risk management and reducing management costs.
Fourth, establish a performance pay evaluation system covering risk management.
Implementing effective incentives for employees has a fundamental impact on the scientificity and efficiency of risk management. The motivation of human behavior lies in the utility incentive related to it. Ignoring the incentive mechanism of risk control can only shift employees' behavioral motivation to pure scale and pure profit orientation. In order to improve the risk constraint on employees, the project team redesigned the employee salary assessment system based on the establishment of departmental performance assessment covering risk content, and incorporated the risk assessment into the employee incentive mechanism.
In the design of departmental performance appraisal system, the project team designed a scientific key performance indicator system (KPI), used the balanced scorecard to realize the comprehensive requirements of performance appraisal elements, introduced comprehensive bank performance indicators including risk-adjusted return on capital (RAROC), avoided the incentive conflict caused by the correlation between indicators in the original appraisal system, and explicitly included risk cost and risk capital as important factors, which reflected the scientificity of the appraisal standards. Based on the performance appraisal system, the project team designed an employee compensation system including risk management incentive mechanism. By adopting different compensation structures and payment terms, the incentive conflicts among employees with different risk preferences were avoided.
Verb (abbreviation of verb) Future planning of internal control and operational risk management of Jinzhou Commercial Bank
A good internal control and risk management system can only be achieved through full and effective implementation. Jinzhou Commercial Bank will continue to improve the implementation of the new system in the future to ensure the final realization of the project design objectives, and will continue to promote the risk control of the bank information system and strengthen the preparations for accurate quantitative risk management.
The internal control and operational risk management of banks cannot be achieved overnight, whether it is the formation of cultural atmosphere, the construction of management system or the implementation of management means and methods. The purpose of implementing the risk and internal control project is not to accomplish everything in one battle, but to lay a solid foundation for continuous internal control and risk management. Jinzhou Commercial Bank will always pay attention to the latest development of internal control and operational risks of domestic and foreign banks, learn and draw lessons from advanced management methods, form a risk management system that meets its own development and operation needs, continuously improve its risk management ability and level, and make continuous progress towards the development goal of international banking management level.