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Duration 35 hours
Course Outline
Introduction to Risk
- The nature of risk and the necessity for banks to manage it
- Is risk solely a negative experience?
- The global scope of banking and associated risks
- An overview of the primary risk categories in banking
- Potential consequences of inadequate risk management
- Risk Appetite
- Risk Management Principles
Case Study
International Risk Regulations
- Definition and scope of risk-based regulations
- The relationship between risk and capital requirements
- Understanding capital adequacy
- Major international regulatory frameworks:
- Basel Accords
- Sarbanes-Oxley Act
Case Study
The Basel Accords
- The evolution of international banking risk regulation
- Objectives of banking risk standards
- Challenges posed by global regulatory requirements
- Basel I Accord and the Market Risk Amendment
- Basel II Accord
- Capital requirements under Basel II
- Basel 2.5 and Basel III:
- Leverage ratio
- Countercyclical capital buffer
- Systemic interconnectedness
Case Study: Capital requirements under Basel III
Market Risk
- Definition of market risk
- Market activities and trading motivations
- Primary market instruments:
- Cash instruments
- Derivative instruments
- Strategies for managing market risk
- Measurement and control of market risk
- Regulatory frameworks for market risk:
- Basel II
- Basel III
Case Study: Consequences of mismanaged market risk – JP Morgan
Credit Risk
- Understanding credit risk
- Credit products in the international market
- Mitigation and management of credit risk
- The credit origination process
- Credit analysis methodologies
- Portfolio management strategies
- Credit risk measurement techniques
- Regulatory standards for credit risk:
- Basel II
- Basel III
Case Study
Operational Risk
- Definition and significance of operational risk
- Differentiating between expected and unexpected losses
- Categorization of operational risk events
- The three lines of defense model
- Operational risk management practices
- Establishing an operational risk management framework
- Initial steps in implementation
- Reporting structures for operational risk
- Scope of operational risk management
- Assessment and measurement of operational risk
- Regulatory guidelines for operational risk:
- Basel II
- Basel III
Case Study: UBS
Liquidity Risk
- Definition of liquidity risk
- Categories of liquidity
- Implications of inadequate liquidity management
- Sources of liquidity
- Liquidity measurement techniques
- Application of stress testing
- Liquidity management strategies
- Regulatory frameworks for liquidity risk:
- Basel II
- Basel III
Case Study:
Asset and Liability Management and Other Risks
- Understanding Asset and Liability Management (ALM)
- The role of ALCOs and Treasury departments
- Distinguishing between the Banking Book and Trading Book
- Interest rate risk within the banking book
- Measuring and managing IRRBB:
- Contractual versus behavioral perspectives
- Stress testing applications
- Addressing other specific risk categories
Case Study:
Supervision & Disclosure
- The scope of supervision and disclosure requirements
- Collaboration between home and host supervisors
- The Internal Capital Adequacy Assessment Process (ICAAP)
- Supervision and disclosure standards under Basel regulations
- Changes introduced by Basel III
Case Study:
Defining Enterprise Risk Management
- Concept of Enterprise Risk Management (ERM)
- Advantages of adopting ERM
- The ERM implementation process
- Structure of the risk management function
- Portfolio management in an ERM context
- Considerations for new product development
- Guidance from the Basel Committee
- Commonly used ERM frameworks
Case Study
Integrated Risk Management
- Consolidating risk management across the bank
- Role of risk committees
- Formulating risk policies
- Identifying and assessing risks
- Aggregating risks across different types
- Calculating economic capital
- Understanding interactions between risk types
Case Study
Corporate Governance
- Definition of corporate governance
- Identifying stakeholders and managing conflicts of interest
- Benefits of strong corporate governance
- Evolution of corporate governance standards – Cadbury, Walker, and Hicks reports
- External perspectives on governance (rating agencies and regulators)
Case Study: Can a bank be “Too big to manage”?
Effective Corporate Governance
- Organizational corporate structures
- The role of non-executive directors
- Governance techniques and strategies
- Committee structures and management practices
- Communication protocols
- Responsibilities of senior management
- Internal corporate governance frameworks
- OECD and Basel guidance
Case Study:
Risk Governance
- Governance structures for risk management
- Cultivating risk awareness
- Embedding a risk culture
- Functioning of risk management committees
- Interplay between governance, risk, and compliance
Case Study:
Future Outlook
- The emerging regulatory regime:
- Impact on the banking industry
- Impact on regulatory bodies
- Key priorities in the global banking regulatory agenda
- Potential future risk hotspots
Testimonials (3)
Fun to talk
Jihan Fadila - BAF
Course - Root Cause Analysis (RCA) for Internal Audit
The exercises were great — they helped me get back “on the field.”
Lilia Boico - PUBLIC
Course - AML/CTF Governance and Risk Oversight Training
casual conversation supported by specific examples
