ABSTRACT
The birth of New Basel Accord leads modern commercial banks to the time of
Enterprise Risk Management (ERM).With higher requirements to the bank risk
management ability, banks do not separate different business parts or risk patterns in the
risk management,but rather see them as a whole. Western banks have gone far beyond
us in the ERM application ,so we should learn their experiences in ERM fully and
deeply and to apply ERM as soon as quickly.
In order to gain practical value, the commercial bank should integrate all risks by
means of a core idea to achieve internal comprehensive risk management based on
scientific qualification of risks. So the paper proposes the Capital against Risk should be
the core idea of ERM, at the same time, the ERM should also include the support from
supervising departments and market force. Then the ERM is a triple risk-managing
system which includes the bank itself, supervisor and market which can be established
to cover effectively all kinds of risks forced by the bank. The research of this paper will
focus on the establishment of enterprise risk management system based on the Capital
against Risk, and set Industry and Commercial Bank as an example to discuss how to
apply the ERM based on the Capital against Risk in our country.
The paper is divided into six parts. The first one is preface, which introduces the
importance and background for the paper, and summarizes relevant researching
documents and builds the frame of the paper. The second part introduces the risk types
faced by commercial bank and reviews the developing history of its risk management
and defines the idea of enterprise wide risk management of commercial banks thereby,
then introduces the basic theory of the Capital against risk and its value in the risk
management. The third part analyses the present situation of risk management of the
commercial bank in our country and discusses how to establish ERM based on the
Capital against Risk in our country. The fourth part discusses the establishment of the
system of risk management based on the Capital against Risk. The fifth part sets
Industry and Commercial Bank of China as an example to discuss how to apply the
ERM based on the Capital against Risk in our country. The sixth part brings forth the
policy suggestions for our domestic commercial banks.
Key word: Commercial Bank, Enterprise Risk Management, Capital
Against Risk