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Duration 35 hours
Course Outline
Fundamentals of institutional risk
- Defining risk and its criticality for financial institutions
- Evaluating risk beyond potential losses
- The international dimensions of banking and associated risks
- An overview of primary risk categories in banking
- The potential consequences of inadequate risk oversight
- Establishing risk appetite
- Implementing risk management protocols
Case study
International regulatory frameworks
- Principles of risk-based regulation
- The nexus between risk exposure and capital requirements
- Defining capital adequacy
- Major international regulatory instruments
- Basel Accords
- Sarbanes-Oxley Act
Case Study
The Basel Accords in detail
- The evolution of international banking risk regulation
- Objectives of banking risk oversight
- Challenges in applying global regulatory standards
- Basel I Accord and the Market Risk Amendment
- The Basel II Accord
- Capital requirements under Basel II
- Basel 2.5 and Basel III provisions
- The leverage ratio
- Countercyclical capital buffers
- Systemic interconnectedness
Case study: Capital implications under Basel III
Market risk management
- Definition of market risk
- Trading activities and their strategic rationale
- Primary market instruments
- Cash instruments
- Derivative instruments
- Strategies for mitigating market risk
- Measurement and control of market risk
- Regulatory standards for market risk
- Basel II requirements
- Basel III requirements
Case study: Consequences of market risk mismanagement – JP Morgan
Credit risk oversight
- Understanding credit risk
- Credit products in global markets
- Mitigation and control of credit risk
- The credit approval process
- Conducting credit analysis
- Portfolio oversight
- Quantifying credit risk
- Regulatory standards for credit risk
- Basel II requirements
- Basel III requirements
Case study
Operational risk controls
- Defining operational risk and its significance
- Distinguishing between expected and unexpected losses
- Categorizing operational risk events
- The three lines of defense model
- Operational risk management practices
- Establishing an operational risk management framework
- Initial implementation steps
- Reporting structures for operational risk management
- Scope of operational risk management
- Evaluation and assessment of operational risk
- Regulatory standards for operational risk
- Basel II requirements
- Basel III requirements
Case study: UBS
Liquidity risk supervision
- Understanding liquidity risk
- Forms of liquidity
- Impact of inadequate liquidity management
- Identifying liquidity sources
- Quantifying liquidity positions
- Stress testing methodologies
- Strategies for managing liquidity
- Regulatory standards for liquidity risk
- Basel II requirements
- Basel III requirements
Case study:
Asset and Liability Management and additional risks
- Principles of Asset and Liability Management (ALM)
- The role of ALCOs and Treasury departments
- Distinguishing between Banking Book and Trading Book
- Interest rate risk within the banking book
- Measuring and managing Interest Rate Risk in the Banking Book (IRRBB)
- Contractual versus behavioral approaches
- Stress testing
- Other significant risk categories
Case study:
Supervision and disclosure standards
- Understanding supervisory and disclosure obligations
- Coordination between home and host supervisors
- The Internal Capital Adequacy Assessment Process (ICAAP)
- Supervision and disclosure requirements under Basel frameworks
- Specific changes introduced by Basel III
Case study:
Defining Enterprise Risk Management (ERM)
- Concepts of Enterprise Risk Management
- Advantages of implementing ERM
- The ERM methodology
- Role of the risk management function
- Portfolio oversight
- Risk considerations in new product development
- Guidance from the Basel Committee
- Widely adopted ERM frameworks
Case study
Integrated risk management
- Consolidating risk oversight across the institution
- Function and structure of risk committees
- Formulating risk policies
- Identification and evaluation of risks
- Aggregation of risks across different categories
- Calculation of economic capital
- Interdependencies among risk types
Case study
Corporate Governance standards
- Definition and scope of corporate governance
- Stakeholder interests and potential conflicts
- Benefits of robust corporate governance
- Evolution of governance standards – Cadbury, Walker, Hicks reports
- External perspectives on governance (rating agencies, regulators)
Case study: Can a bank be “Too big to manage”?
Best practices in corporate governance
- Organizational structures
- The role of non-executive directors
- Governance techniques and strategies
- Committee functions and management protocols
- Internal and external communication
- The role of senior management
- Internal governance frameworks
- Guidance from the OECD and Basel Committee
Case study:
Risk Governance oversight
- Governance of risk management
- Cultivating an environment of risk awareness
- Implementing a risk-centric culture
- Function of risk management committees
- Alignment of governance, risk, and compliance
Case study:
Future outlook
- The emerging regulatory environment
- Implications for the banking sector
- Implications for regulatory bodies
- Key priorities in the global banking regulatory agenda
- Anticipated areas of regulatory focus
Testimonials (2)
Fun to talk
Jihan Fadila - BAF
Course - Root Cause Analysis (RCA) for Internal Audit
casual conversation supported by specific examples