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Course Outline

An introduction to risk

  • Defining risk and the rationale for bank risk management
  • Is risk solely a negative experience?
  • The global nature of banking and associated risks
  • Introduction to major risk types in banking
  • Consequences of failing to manage bank risks
  • Risk Appetite
  • Risk Management

Case study

International risk regulations

  • Understanding risk-based regulations
  • Linking risk with capital requirements
  • Concept of capital adequacy
  • Key international regulations
    • Basel Accord
    • Sarbanes-Oxley

Case Study

The Basel Accords

  • The evolution of international banking risk regulation
  • Objectives of banking risk management
  • Challenges of global regulatory implementation
  • Basel I Accord and the Market Risk Amendment
  • The Basel II Accord
  • Capital requirements under Basel II
  • Basel 2.5 and Basel III
    • The leverage ratio
    • Countercyclical capital buffer
    • Systemic interconnectedness

Case study: Capital under Basel III

Market risk

  • Defining market risk
  • Market activities and the rationale for trading
  • Primary market instruments
    • Cash instruments
    • Derivative instruments
  • Managing market risk
  • Measurement and management of market risk
  • Market risk regulation
    • Basel II
    • Basel III

Case study: The consequences of mis-managing market risk – JP Morgan

Credit risk

  • Defining credit risk
  • Credit products in the international market
  • Mitigating and managing credit risk
  • The credit process
  • The credit analysis process
  • Portfolio Management
  • Credit risk measurement
  • Credit risk regulation
    • Basel II
    • Basel III

Case study

Operational risk

  • Defining operational risk and its significance
  • Risk of loss, expected versus unexpected losses
  • Operational risk event types
  • Three lines of defence
  • Operational risk management
  • Operational risk management framework
  • Where to begin?
  • Reporting lines for operational risk management
  • Scope of operational risk management
  • Measuring and assessing operational risk
  • Operational risk regulation
    • Basel II
    • Basel III

Case study: UBS

Liquidity risk

  • Defining liquidity risk
  • Types of liquidity
  • Consequences of inadequate liquidity management
  • Sources of liquidity
  • Measuring liquidity
  • Stress testing
  • Managing liquidity
  • Liquidity risk regulation
    • Basel II
    • Basel III

Case study:

Asset and Liability Management and other risks

  • Defining Asset and Liability Management
  • ALCOs and Treasuries
  • Banking book versus Trading Book
  • Interest rate risk in the banking book (IRRBB)
  • Measuring and managing IRRBB
    • Contractual versus behavioural approaches
    • Stress testing
  • 'Other' risks

Case study:

Supervision & disclosure

  • Defining supervision and disclosure
  • Home/host supervisory cooperation
  • The Internal Capital Adequacy Assessment Process (ICAAP)
  • Supervision and disclosure under Basel
  • Changes introduced by Basel III

Case study:

Defining Enterprise Risk Management

  • Defining ERM
  • Benefits of ERM
  • The ERM process
  • The risk management function
  • Portfolio management
  • New product development
  • Basel Committee guidance
  • Commonly adopted frameworks

Case study

Integrated risk management

  • Integrating risks across the bank
  • Risk committees
  • Risk policies
  • Risk recognition and assessment
  • Aggregating risk across types
  • Economic capital
  • Interaction between risk types

Case study

Corporate Governance

  • Defining corporate governance
  • Stakeholders and potential conflicts
  • Benefits of strong corporate governance
  • Evolution of corporate governance: Cadbury, Walker, Hicks reports
  • External perspectives on Corporate Governance (rating agencies, regulators)

Case study: Can a bank be "Too big to manage"?

Good corporate governance

  • Corporate structures
  • The role of non-executive directors
  • Techniques and strategies
  • Committees and management practices
  • Communication
  • The role of senior management
  • Internal framework of Corporate Governance
  • OECD and Basel guidance

Case study:

Risk Governance

  • Risk management governance
  • Fostering a culture of risk awareness
  • Implementing a risk culture
  • Risk management committees
  • Governance, risk and compliance

Case study:

The future

  • The new regulatory regime
    • Implications for the banking industry
    • Implications for regulators
  • Priorities in the global banking regulatory agenda
  • Future flashpoints
 35 Hours

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