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Course Outline
An introduction to risk
- Defining risk and the necessity for institutional risk management
- Understanding risk beyond negative outcomes
- The global scope of banking operations and associated risks
- Overview of primary risk categories within financial institutions
- Implications of inadequate risk management in banking
- Risk Appetite Frameworks
- Risk Management Principles
Case study
International risk regulations
- Foundations of risk-based regulatory frameworks
- Relationship between risk exposure and capital requirements
- Definition and importance of capital adequacy
- Key international regulatory standards
- Basel Accords
- Sarbanes-Oxley Act
Case Study
The Basel Accords
- Evolution of international banking risk regulation
- Primary objectives of banking risk oversight
- Challenges associated with harmonizing global regulations
- Basel I Accord and the Market Risk Amendment
- Basel II Accord framework
- Capital requirements under Basel II
- Basel 2.5 and Basel III enhancements
- Leverage ratio standards
- Countercyclical capital buffer
- Systemic interconnectedness controls
Case study: Capital requirements under Basel III for government-regulated entities
Market risk
- Definition and scope of market risk
- Trading activities and market participation
- Primary financial instruments
- Cash market instruments
- Derivative instruments
- Strategies for managing market risk
- Measurement and management methodologies for market risk
- Regulatory oversight of market risk
- Basel II provisions
- Basel III provisions
Case study: Consequences of inadequate market risk management – JP Morgan
Credit risk
- Definition and scope of credit risk
- Credit products in the international marketplace
- Mitigation strategies and credit risk management
- The credit approval process
- Credit analysis methodology
- Portfolio management techniques
- Credit risk measurement models
- Credit risk regulatory standards
- Basel II provisions
- Basel III provisions
Case study
Operational risk
- Definition and significance of operational risk
- Expected versus unexpected loss profiles
- Classification of operational risk events
- The three lines of defense model
- Operational risk management approaches
- Operational risk management framework components
- Implementation pathways for operational risk controls
- Reporting structures for operational risk management
- Scope of operational risk management activities
- Measurement and assessment of operational risk
- Operational risk regulatory standards
- Basel II provisions
- Basel III provisions
Case study: UBS
Liquidity risk
- Definition and scope of liquidity risk
- Types of liquidity constraints
- Consequences of failing to manage liquidity effectively
- Sources of institutional liquidity
- Liquidity measurement metrics
- Stress testing methodologies
- Strategies for managing liquidity
- Liquidity risk regulatory standards
- Basel II provisions
- Basel III provisions
Case study:
Asset and Liability Management and other risks
- Definition of Asset and Liability Management (ALM)
- Role of Asset-Liability Committees (ALCOs) and Treasury functions
- Differences between Banking Book and Trading Book
- Interest rate risk in the banking book (IRRBB)
- Measurement and management of IRRBB
- Contractual versus behavioral cash flows
- Stress testing applications
- Assessment of residual risk categories
Case study:
Supervision & disclosure
- Principles of supervision and financial disclosure
- Coordination between home and host supervisory authorities
- The Internal Capital Adequacy Assessment Process (ICAAP)
- Supervisory and disclosure requirements under Basel standards
- Updates introduced by Basel III
Case study:
Defining Enterprise Risk Management
- Concept of Enterprise Risk Management (ERM)
- Benefits of implementing ERM
- The ERM lifecycle and process
- Structure and role of the risk management function
- Risk-informed portfolio management
- Risk integration in new product development
- Guidance from the Basel Committee on Banking Supervision
- Industry-standard ERM frameworks
Case study
Integrated risk management
- Cross-institutional risk integration strategies
- Function of risk committees
- Formulation of enterprise-wide risk policies
- Risk identification and assessment protocols
- Aggregation methodologies across risk categories
- Economic capital allocation
- Interdependencies between distinct risk types
Case study
Corporate Governance
- Definition of corporate governance standards
- Stakeholder dynamics and conflict resolution
- Advantages of effective corporate governance
- Historical development – Cadbury, Walker, and Hicks reports
- External perspectives from rating agencies and regulators
Case study: Can a bank be “Too big to manage”?
Good corporate governance
- Organizational structures supporting governance
- Role of non-executive directors
- Governance techniques and strategic approaches
- Committee structures and management practices
- Communication protocols for governance entities
- Responsibilities of senior management
- Internal components of corporate governance frameworks
- OECD and Basel guidelines on governance
Case study:
Risk Governance
- Governance structures for risk management
- Cultivating a culture of risk awareness
- Implementation of enterprise-wide risk culture
- Composition and function of risk management committees
- Integration of governance, risk, and compliance functions
Case study:
The future
- Evolving regulatory landscape
- Impact on the banking industry for government oversight
- Implications for regulatory bodies
- Priorities in the global banking regulatory agenda
- Anticipated regulatory flashpoints
35 Hours
Testimonials (2)
Fun to talk
Jihan Fadila - BAF
Course - Root Cause Analysis (RCA) for Internal Audit
casual conversation supported by specific examples