This course is available as a 5 day comprehensive course. For those delegates who do not require the Basel III Workshop, this can be opted out.
Financial institutions have been formally managing their risks from inception. But the perception of risk management is fundamentally changing within these institutions. No longer is it seen purely as a control mechanism – but as a critical input into the basic business question: am I earning enough revenue out of this transaction to compensate me for the additional risks I am taking on?
This concept permeates all the leading financial institutions. Every transaction needs to be assessed in terms of the increase in risk to the institution, with the assurance that the pricing of that transaction will generate a suitable return. Budgets should be allocated, and performances measured, on the basis of revenue earned per unit of risk generated.
Such a risk culture is reinforced by the new Basel Accord, already implemented in some countries and due to be implemented in many more in the next 2-3 years. This requires the banks to allocate regulatory capital against the major components of risk, using either regulatory or, more likely, internal models.
In the current economic downturn, many financial institutions lost large amounts of money and had to be assisted by governments. Was this a failure of risk management, and if so, why? This course will discuss what happened, and how some institutions actually came out of the credit crisis with enhanced reputations.
This course is designed to provide delegates firstly with a high-level overview of modern risk management, including a breakdown of the new Accord and a comparison with the old one. This is then followed by an in-depth examination of the techniques and management structures used to assess and to control risk, including a detailed discussion on the implementation of Value-at-Risk, which is becoming the de facto standard for measuring risk across all the major classes: market, credit and operational. However, the new proposals, announced in May 2012, may well replace this measure by Expected Shortfall, at least for Market Risk. We will discuss why, and how it may be calculated.
This unique course follows closely the proposed structure of the new Accord, and is designed to enhance your knowledge on:
- Why risk management has become so crucial to financial institutions
- What decisions you need to make when implementing the new Accord, and what is the timeline
- How should risk management be organised
- Estimating the level of Economic Capital required to underpin any transaction, and therefore address the question: how much Economic Capital does an institution require?
- Analysing the major forms of risk generated by financial institutions, particularly within an Value-at-Risk framework
- What are the competing internal approaches to the measurement of Credit Risk
- How to implement an Operational Risk methodology successfully
- What methodologies for Operational Risk measurement are becoming industry-standard
- Does modelling work: how to mitigate the really big events that may bring you down!
As a result of the recent banking crisis in the West, the Accord has evolved into what was called Basel II.5 and is now called Basel III. These significant changes to the Accord, and how they will impact on the business model of your bank, will be discussed in detail.
To reinforce the course, there are:
- A wide range of real-life case-studies discussing the lessons we should learn from these failed institutions - could the same events happen at your institute?
- Computer simulations of the latest techniques to model market, credit and operational risk, and discussions about commercially-available software
Attend this comprehensive 5 day course and lean:
- A broad look across risk management
- The Basel Accord – what is it, and why do we have it?
- Did the Accord work in the current economic crisis?
- - Basel II.5 and III – what are the impacts of the proposed changes
- Development of the ICAAP in preparation for your SReP
- Creation of a risk framework
- How risk management should be organized
- The assessment of market risk using both traditional and modern approaches
- Just announced – the new proposals for Market Risk following a Fundamental Review
- Credit portfolio management – why is this the new paradigm?
- How operational risk is being assessed and managed
- Stress testing – what went wrong, and how this must be changed!!
- How can Risk Management add value??
Basel III Workshop
Following the Western banking crisis of 2007-9, the Basel Committee on Banking Supervision (BCBS) has issued a number of recommended changes to the Basel II Accord with proposed timetables. These changes are known collectively as Basel II.5 and Basel III. Whilst individual countries do not have to implement these changes, or follow the timetables, it is highly likely that the regulator will require the locally authorised banks to comply in due course.
This is a proposal to run a 1-day interactive workshop on Basel III for senior management of commercial banks. The objectives of the workshop are:
- To outline the proposed changes
- To discuss why these particular changes have been introduced – what problems are they trying to address?
- To discuss the likely impact on banks’ business models