Risk Management in Banks
Select Other "city & date"
Risk Management in Banks Course
Introduction:
Risk management in banking has been transformed over the past decade, largely in response to regulations that emerged from the global financial crisis and the fines levied in its wake. But important trends are afoot that suggest risk management will experience even more sweeping change in the next decade.
This 10 Days course will develop an understanding of the importance of operational risk management within the Banking and Finance industry and build an appreciation for the impact operational risk can have.
The focus is on the practical implication of operational risk, rather than just the theory. To this end real-world examples and case studies are used throughout.
The aim is that participants not only leave with a better understanding of operational risk, but also how better to manage it.
The goal of this course is to understand how risks are categorized, quantified, monitored and managed within banks, and the related regulatory requirements.
Course Objectives:
By the end of the Risk Management in Banks training Course, participants will be able to:
- Understand the business model of banks in relation to the risks they take
- Identify the key banking risks groups and their relative importance.
- Learn about the qualitative and quantitative tools for measuring and managing financial risk in banks
- Understand the regulation aimed at controlling risk in banks and how it has evolved
- Understand the different methodologies used for regulatory capital and liquidity requirements in banks
Who Should Attend?
The Risk Management in Banks Course is suitable for:
- Risk managers, regulators, internal auditors, bankers and analysts,
- Also appropriate for a broader audience who wish to gain a better understanding of risk management processes within a bank and how they are regulated.
- It is targeted at an intermediate level and assumes a basic understanding of accounting, financial products and banking functions.
Course Outlines:
Risk Management
- Identifying and defining major risk groups and how they arise in the derivatives business: market, credit, liquidity, operational and reputation
- Lessons learned from risk management failures in derivatives
- Exercise: Company failures caused by derivatives
Analytic Overview
- The aim of this section is to introduce the inherent risks of a bank’s balance sheet and the need for capital to cover these risks.
Analyzing Banks
- Why risk is inherent to a bank’s business model and therefore why effective risk management is critical
- The balance sheet of a typical bank
- The importance of capital
Key Risk Areas
- Identifying and defining major risk groups: credit, market, liquidity, operational, legal, regulatory, counterparty and reputation
- Overview of how much risk banks take in each group and the complexity of the risk
Risk Management Failures
- Historical failures in financial institutions
- Lessons from the global financial crisis (GFC)
- Regulatory changes since the GFC
Regulatory Capital in Banks
- Regulatory capital
- Basel and the three pillars
- Overview of minimum capital ratios
- Exercise: Analyzing the Pillar 3 report of a large bank
Market Risk
- This section introduces sources of market risk in the balance sheet and how this risk can be quantified and managed. Finally, the section covers the principles of regulatory capital allocation for market risk.
Definitions and Sources of Market Risk
- Defining market risk
- Exercise: Defining the magnitude of various market risks
Value-at-Risk (VaR)
- Purpose of VaR
- Methodologies for calculating VaR
Regulatory Capital for Market Risk
- Trading book and banking book
- Standardized approach
- Internal models – the use of VaR to define regulatory capital
- Back testing
- Exercise: Market risk disclosures at a global bank
Credit Risk
- Credit risk is possibly the most important risk faced by most commercial banks. This section explains the nature of credit risk, including the relevant products, types of credit risk, quantification and regulatory capital methodologies.
Identifying Credit Risk
- Credit products
- Types of credit risk
Credit Risk Indicators
- Credit ratings
- Credit spreads
Mitigating Credit Risk
- Contractual mitigates
- Securitization and credit derivatives
- Exercise: Credit portfolio management in a global bank
Quantifying Credit Risk
- Default probability
- Loss given default (LGD) and recovery
- Default correlation
Regulatory Capital for Credit Risk
- Standardized risk weights
