The purpose of this study is to evaluate the operating performance of Taiwan banking industry. The capital adequacy ratio and NPL ratio as risk factors. In this study, we apply the method of data envelopment analysis and super efficiency concent to estimate the operating ferformance based on the financial information obtained from 31 banks in Taiwan from 2007 to 2009 by the way to compare three situations:(1) not to consider risk factors, (2) to consider risk factors as input variables, (3) to consider risk factors as output variables and then choose the best performance. The empirical results indicate that by taking into account risk factors as output variables would make the best operating performance for banking firm. This because the bank takes risk factors as firms outputs ,it can lead to improve the operational efficiency for bank management. This empirical results could also provide banking industry to improve its strategies of risk management and provide some suggestions useful to related policy makers.