Research on Operational Risk Evaluation of Commercial Bank with Incomplete and Linguistic Information

Abstract

Evaluation and management of operational risk has received significant attention as the operational risk extends its influence to the bank industry increasingly. In order to overcome the limit that commercial banks of China are lack of internal loss data, a frame, using an uncertain linguistic term set, based on risk event type as well as the business unit is set up to evaluate the operational risk in commercial bank. UEOWA operator is applied to aggregate the linguistic information which uses an interval form to express some fuzzy indices that are difficult to quantify directly. Then a complete process for evaluating operational risk is introduced. Finally, an example shows that the proposed frame and methods are useful and exercisable.