Media Partners
Operational Risk Management - Dubai
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Course DescriptionFor the current edition of the public course in Dubai & London click here. All too often institutions have seen operational risk as an issue of 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 mitigation strategies. This 3 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 a financial institution. Main topics covered include:
By the end of this training you will:
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. |
What Will You Learn |
Main Topics Covered During This Training |
Who Should AttendFrom Central and Investment Banks, Asset Management, Pension Funds, Hedge Funds, Leasing companies, Insurance companies, Fund Managers and other financial institutions:
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The first two days define operational risk - the methodology and measurements of the various departments. Specific areas will be examined in day three in order to provide practical examples in a diversity of bank operations areas.
Day One
- A short history of risk
- Dimension & drivers of risk management
- Business drivers
- Regulatory drivers
- Rating Agencies & risk
- Cross-border implications
- 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
- What is capital?
- The BIS capital standards
- Basel’s three pillars
- Basel’s operational risk options
- Implementation considerations
- Implementation of Basel II
- The Pillar II maze
- Implementation issues
- 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
- 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
Measuring operational risk
- Risk analysis
- Determining the risk appetite
- Risk impact/Frequency
- Impact vs. Probability
- A generic case study
- Measurement methods
- The Loss Modeling Method
- The COSO ERM framework
- Monte Carlo simulations
- Operational risk & bank strategy
- Quantitative and qualitative approaches
- Operational risk and the business cycle
- Problems in identifying operational risks
The Black Swan
- The challenges of outlier events for contingency planners
- Explaining Black Swan events and their impact on company's operations
- We examine the nature of a Black Swan event
- Can the eruption of Iceland’s Eyjafjallajökull volcano and the Deepwater Horizon catastrophe be seen as black swan events?
- Challenges for Planners, Strategists and CEOs
- How can you mitigate a Black Swan event?
- Identifying blind spots in planning
Managing Operational Risk under Basel
- Basel Standards
- Basel’s’ three approaches
- Implementing Basel’s practices
Day Two
Developing an appropriate Risk Management Environment
- Policy and structure
- Developing an appropriate risk management environment
- Implementation
- Mapping risks to controls
- Understanding risks, goals and priorities
- Prioritizing risk based on probability and impact
- Establishing responsibilities for risk management
- Mapping risk strategies to categories of control
- Designing and documenting specific controls
- Implementing risk management controls
Specific examples of Operations Risks
- Internal fraud
- External fraud
- Employment practices and workplace safety
- Clients, products and business practices
- Damage to physical assets
- Execution, delivery and process management
- Business disruption and system failures
Products & Operational Risk
- Case Study: The US sub-prime mortgage crisis
Managing Operations Risk
- Assessment methods
- Loss data collection (internal & external)
- Using loss data
- Scenario analysis
- Using realistic scenarios
- Statistical techniques
- Problems and issues in assessing and managing operational risk
The Risk Management Process
- Environmental survey
- Technology inventory
- Identifying and assessing the operational risks (including an illustrative operations risk management plan)
- Minimum control requirements
- Risk identification tools
- Control and mitigation of specific operational risks
- Establishing a framework of formal, written policies and procedures
- The Back Office and Operations Risk
- Events – causes and consequences
- Environmental controls
- Risk Mitigation & Control Implementation
- Standardization of Hardware and Software
- Case Study: Bernard Madoff Investment Securities
- Real Time Gross Settlement (RTGS)
- Large Value Transfer Systems (LVTS)
- Cash management products
- Securities & collateral
- Interbank messaging systems
- Cheque payments
- Continuous Linked Settlement (CLS)
- Payment instruments (Cheques, Electronic Payments, Cards, ATMs, Internet)
- Retail payment systems
- Core operations
- Distributed operations
- Standalone microcomputers
- Support functions
- Controls
- Environmental
- Technology (preventive maintenance, security, database management, personnel control, internal procedures, change management)
- Storage & backup
- National Australia Bank
- Société Générale
Richard Barr
Richard holds a B.S. in International Business Administration from San Jose State University in California. His professional experience spans 19 years, 5 of which were spent with Wells Fargo Bank. Another 5 were spent honing his global banking skills, when Richard was involved with International Trade Finance, Real Time Gross Settlement and Cross Border Banking. The past 9 years have been in the private and high-tech sectors providing high-level consulting services, business analysis, project management and training to a wide range of banking clientele across the globe.
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