What past delegates say?
"Fantastic in all ways! Delivery, interaction, knowledge and friendliness. Easily one of the best courses I have been on!"
Risk Manager, Barclays Bank
“ Thank you very much. You made it so easy and funny and I learnt a lot!’
Former Delegate, Abu Dhabi Council
“Excellent delivery and application. It was very useful to get a practical application relevant to our background.”
Former Delegate, Malta Financial Services Authority
Product Manager, VP Securities
“Very exciting and informative and it will certainly help my role in operational risk management.”
Senior Manager, African Development Bank
“Very enthusiastic and personable trainer.”
Head of the Department, SG Hambros
“It has given me a different perspective on risk management.”
Operations Manager, African Import-Export Bank
“Very intensive, lots to take in but got me thinking! I will look to apply”
“Very enjoyable. Lots to think about. Very good trainer.”
Former Delegate, DVB Bank
Operational Risk Management
In-Company, call us for more information
All too often institutions have seen operational risk as complying with regulatory requirements rather than a process which can contribute to the financial fortune of an organisation. Implementing an effective operational risk framework is a complex process which requires an in-depth understanding of the nature of risks involved and strategies to mitigate them.
This 2 day practical course explores the best practice in operational risk management, at all stages: from assessment to implementation. You will gain tools to manage risk and to create environment where this function is perceived as a value added proposition increasing profitability and structural strength of an organisation.
What Will You Learn
Main Topics Covered During This Training
Who Should Attend
From Commercial Banks, Central Banks, Investment Banks, Asset Management firms’ representatives, Pension Funds, Hedge Funds, Leasing companies, Insurance companies, Fund Managers, Other financial institutions
Course Level: The course is designed for existing Risk Management professionals, both beginners and intermediate, who want to enhance their risk management knowledge and skills.
In-Company, call us for more information
Delegates have to be from the same company and register at the same time.
Operational Risk Management & Mitigation - A 2 Day Course
What is risk?
- A short history of risk
- Dimension & drivers of risk management
- Business drivers
- Regulatory drivers
- Rating Agencies & risk
- Cross-border implications
- What is the value of Operational Risk Management?
- How we categorize risks
- What is covered under Basel II?
- Risk categories
- Basel II risk coverage
- Operational risk categorization
- The financial risk management environment
- The operational risk management environment
- The technical Implications of operations risk management
Risk & Capital - An Introduction to Basel I, II and III
- What is capital?
- Capital in financial institutions
- The BIS capital standards
- Basel’s three pillars
- Basle’s operational risk options
- Implementation considerations
- Implementation of Basel
- The Pillar II maze
- Implementation issues
Managing Operations Risk
- The governance process
- Setting risk management objectives
- Building a risk culture
- Examples of a staff risk culture
- Examples of management risk culture
- Why are risk cultures important?
- Compliance requirements
- Operational risk – definition and examples
- Enterprise Risk Management
- Key elements in managing operations risk
- A selection of case studies to illustrate the material covered
- The banking activity framework - the “Top-Down” approach of the BIS
- Main areas affected by operational risk
- Key Risk Factors
Operational Risk –Practical Examples
Participants are led through a series of recent operational risk failures in recent years aimed at illustrating the wide variety of risks that can be encountered.
Case Study: We take detailed look at the 2007 7.2 billion dollar loss at SocGen, its causes and the key warning signals that were overlooked.
Key Elements in Managing Operational Risk
- The core issues in managing operational risk
- Risk Analysis
- Determining the “Risk Appetite”
- Risk impact/Frequency
- Impact vs. Probability
- A generic case study
Operational Risk Financing
- Risk financing
- Optimizing risk & reward
- The cost of risk
- The operational risk financing program
- Operational risk financing mechanisms
- How financing methods are applied
Methods & Models
- Measurement methods
- The Loss Modeling Method
- Monte Carlo simulations
- Operational risk & bank strategy
- Quantitative & Qualitative approaches
- Key Risk Indicators
- Operational risk & the business cycle
- Problems in identifying operational risks
COSO ERM Framework
- An integrated risk management framework
- The COSO framework
- Codification of the 17 COSO Principles
The Black Swan
The challenges of outlier events for contingency planners
Can recent outlier events, the eruption of Iceland’s Eyjafjallajökull volcano, the Deepwater Horizon catastrophe and the 2011 Japanese Tsunami be seen as black swan events?
- Challenges for Planners, Strategists and CEOs.
- How can you mitigate a Black Swan event?
Operations Risk & Basel (II and III)
- The BIS definition of operational risk
- BIS standards for managing operational risk
- Basic Indicator Approach (BIA)
- Business Lines Approach
- Advanced Measurement Approaches (AMA)
- Loss event types
- Criteria for the Advanced Measurement Approach
- All Basel material is current and up-to-date in terms of current BIS developments
Managing Operations Risk under Basel - A “Hands-on” approach
- Basel Standards
- Basel’s’ three approaches
“Sound Practices for the Management and Supervision of Operational Risk”
- Principles for the management of operational risk
- Sound operational risk governance
- Each of the 11 Principles are examined in terms of their content, meaning and implementation factors
- Developing an appropriate Risk Management Environment
- Policy & structure
- Developing an appropriate risk management environment
- Mapping risks to controls
- Understanding risks, goals and priorities
- Prioritizing risk based on probability & impact
- Establishing responsibilities for risk management
- Mapping risk strategies to categories of control
- Designing & Documenting specific controls
- Implementing risk management controls
Defining the Categories of Operational Risks
We examine the BIS categories of operation risk in terms of specific examples. These categories are:
- Internal Fraud
- External Fraud
- Employment Practices and Workplace Safety
- Clients, Products & Business Practices
- Damage to Physical Assets
- Execution, Delivery & Process Management
- Business Disruption & System Failures
Products & Operations Risk
Case Study – The US Sub-Prime Mortgage Crisis
The 2008 Global financial crisis was triggered by the Sub-Prime Mortgage problem in the United States.
This case study clearly illustrates how insufficient or total lack of attention to Operations Risk in the detail and stress testing of the Mortgage Product, its various derivatives as well as the processes and operations led to financial meltdown across the globe.
Managing Operations Risk -Tools and Techniques
- Causes & Consequences – The Bow Tie
- The math of operational risk management
- Causes & consequences of loss events and what they tell us
- The Bow Tie Diagram – building and using this method to create effective controls
Methods for Assessing Operational Risks
- Four basic assessment methods
- Loss data collection (internal & external)
- Using loss data
- Internal data
- External data
- Scenario analysis
- Using scenarios Tabletop/ Desktop exercises
- Making tabletop exercise effective
- Why exercise? Why use scenarios?
- Statistical techniques
A Risk Assessment Model
- The process
- Environmental survey
- Technology inventory
- Identifying & assessing the operational risks (including an illustrative operations risk management plan)
- Minimum control requirements
- Risk identification tools
Current Operations Risk Management Themes in Banking
New technologies and practices are changing the nature of bank operational risk in many dramatic ways. In this section we explore a selection of current “risk themes” and get to grips with how the operations risk profile is changing in the constant struggle between profit and prudence.
Kweku Adoboli – from rising star to rogue trader
This case studiy on a recent event provides an in-depth examination of operational risk management failures resulted in substantial losses to UBS. We look at what went wrong and why and what lessons can be learned from this series of events.
Included in this case study we have a special section on rogue traders generally in which we deal with issues such as;
- The psychology of the rogue trader
- Types of traders
- The FSA investigation and their findings
- Ranking Adoboli in the rogue traders league
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