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Title: An assessment of operational risk in Thai commercial banks under the new Basel Capital Accord
Author: Suebsubanunt, Somkiat
ISNI:       0000 0001 3489 0927
Awarding Body: Brunel University
Current Institution: Henley Business School
Date of Award: 2007
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Operational risk management is considered one of the most important areas of risk management, particularly in the financial services sector. In recent years, financial institutions and regulators have concentrated their efforts and resources on how to measure and manage these risks before they cause great losses as evidenced in cases of Barings Bank and Allied Irish Bank. Most studies on operational risks focus more on the creation of sophisticated mathematical models for measuring rather than managing operational risks. As a consequence, this study explores the under-researched issue of the management of operational risks of Thai commercial banks. Four categories of Thai banks classified by shareholder type represented sample cases for investigation. Methodologies applied in this research were qualitative and quantitative. Given the absence of prior research in the subject area relating to emerging markets like Thailand, a qualitative multiple case studies methodology was used initially to develop theoretical propositions. The capabilities of Thai banks and external and internal factors related to operational management were assessed to provide an in-depth understanding of operational performance, the basis of an operational risk management framework and to provide a method of determining a bank's capital adequacy requirements. Following this, quantitative research was employed to complement, substantiate and extend the qualitative research. In particular, this quantitative analysis examined the relationship between national and corporate cultural dimensions against the operational risk management of Thai banks and also tested principal relationships of the proposed operational risk management framework. The findings revealed a number of key success factors for managing operational risks the financial sector, such as the strong commitment of the Board of Directors and Management, the establishment of an independent operational risk management unit, stat! participation and the central bank's control and support. With regards to external and internal factors, the study also gave some suggestions for Thai commercial banks to prepare for the implementation of the Capital Accord (Basel II) by the end of 2008 on the basis of the mutual interest between regulators and stakeholders. Several findings emerged that are discussed at length which have managerial implications for Thai and international banking. Practical tools and a theoretical framework are discussed that can be utilised by those operational risk management disciplines within Thai banking. The results support the theoretical framework proposed by BBA (1999) and Basel (200 1a) that all categories of Thai banks are adopting the Standardised Approach that utilises a 'bottom-up' process in measuring capital adequacy charges. A model of operational risk for Thai commercial banks is proposed to help in the management of operational risk and the thesis concludes by identifying practices in operational risk that are key to success for sound long-term operational risk management.
Supervisor: Not available Sponsor: Not available
Qualification Name: Brunel University, 2007 Qualification Level: Doctoral
EThOS ID:  DOI: Not available