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Duration 35 hours
Course Outline
Fundamentals of Risk
- Defining risk and the rationale for its management in banking
- Beyond downside: Is risk solely a negative experience?
- The global nature of banking and associated risks
- Overview of key risk categories in banking
- Consequences of ineffective risk management
- Risk Appetite
- Risk Management Principles
Case Study
International Regulatory Frameworks
- Understanding risk-based regulations
- The nexus between risk and capital
- The concept of capital adequacy
- Key international regulatory standards
- Basel Accords
- Sarbanes-Oxley Act
Case Study
The Basel Accords in Detail
- Evolution of international banking risk regulation
- Objectives of banking risk frameworks
- Challenges posed by global regulation
- 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
- Defining market risk
- Market activities and trading rationale
- Primary market instruments
- Cash instruments
- Derivative instruments
- Strategies for managing market risk
- Measurement and management of market risk
- Regulatory oversight of market risk
- Basel II
- Basel III
Case Study: Implications of poor market risk management – JP Morgan
Credit Risk
- Understanding credit risk
- Credit products in international markets
- Mitigation and management of credit risk
- The credit decision process
- Credit analysis methodologies
- Portfolio management
- Measurement of credit risk
- Regulatory standards for credit risk
- Basel II
- Basel III
Case Study
Operational Risk
- Defining operational risk and its significance
- Expected and unexpected loss profiles
- Categorization of operational risk events
- The three lines of defense model
- Operational risk management principles
- Framework for operational risk management
- Initial steps in implementation
- Reporting lines for operational risk management
- Scope of operational risk management
- Assessment and measurement techniques
- Regulatory standards for operational risk
- Basel II
- Basel III
Case Study: UBS
Liquidity Risk
- Understanding liquidity risk
- Forms of liquidity
- Impacts of inadequate liquidity management
- Sources of liquidity
- Liquidity measurement
- Stress testing
- Liquidity management strategies
- Regulatory standards for liquidity risk
- Basel II
- Basel III
Case Study:
Asset and Liability Management (ALM) and Other Risks
- Principles of Asset and Liability Management
- ALCOs and Treasury functions
- Banking book versus Trading book
- Interest rate risk in the banking book
- Measurement and management of IRRBB
- Contractual vs. behavioral perspectives
- Stress testing
- ‘Other’ risk categories
Case Study:
Supervision & Disclosure
- Concepts of supervision and disclosure
- Home/host supervisory cooperation
- The ICAAP process
- Supervision and disclosure under Basel frameworks
- Changes introduced by Basel III
Case Study:
Defining Enterprise Risk Management (ERM)
- What is ERM?
- Advantages of ERM
- The ERM process
- Role of the risk management function
- Portfolio management in ERM
- New product development and risk
- Basel Committee guidance
- Commonly used ERM frameworks
Case Study
Integrated Risk Management
- Integrating risk across the bank
- Role of risk committees
- Formulating risk policies
- Identifying and assessing risks
- Aggregating risk across different types
- Economic capital calculation
- Interactions between risk types
Case Study
Corporate Governance
- Defining corporate governance
- Stakeholder identification and conflict resolution
- Benefits of effective corporate governance
- Evolution of corporate governance – Cadbury, Walker, and Hicks reports
- External perspectives on governance (rating agencies, regulators)
Case Study: Can a bank be “Too big to manage”?
Best Practices in Corporate Governance
- Corporate structural designs
- Role of non-executive directors
- Techniques and strategic approaches
- Committee structures and management practices
- Communication strategies
- Responsibilities of senior management
- Internal governance frameworks
- OECD and Basel guidance
Case Study:
Risk Governance
- Governance of risk management
- Cultivating risk awareness
- Embedding a risk culture
- Establishing risk management committees
- Aligning governance, risk, and compliance
Case Study:
Future Outlook
- The new regulatory landscape
- Impact on the banking industry
- Impact on regulators
- Key priorities in the global banking regulatory agenda
- Potential future risk areas
Testimonials (2)
Fun to talk
Jihan Fadila - BAF
Course - Root Cause Analysis (RCA) for Internal Audit
casual conversation supported by specific examples