Banking Operational Risk Management on DS Evidence Theory

Operational risk (oprisk) measure is one of the primary management in banks. Because of the uncertainty in oprisk assessing it´s important to use the uncertainty reasoning theory to quantify the information from experts, owing to the key role of the experts´ knowledge to the oprisk measurement. This paper used the DS evidence theory to establish the frame of discernment, collect the information from experts, and adopt 2 kinds of weight coefficients: weight of same group experts and weight between different groups, to modify the Dempster´s combining formula to find the final assessment of oprisk. The paper it confirms the validity of this method through demonstration on 3 commercial banks in China.