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Operational Risk Management Training Course

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Module 1: Understanding operational risk

  • An overview of financial and non-financial risk
  • What is operational risk?
  • The boundaries with market and credit risk
  • Key terms: the components and attributes of risk
  • Defining the scope of operational risk
  • Frequency vs. impact, expected vs. unexpected losses

Case study: differentiating and allocating risks (NAB FX trading)

Module 2: Operational risk event types and structures

  • Risk, events and controls
  • Operational risk categorisation, organisational modelling and frameworks
  • Inherent and residual risks, causal and secondary risks
  • Building a risk structure – risks, events and controls
  • Creating risk statements
  • Examples of risk, events and controls
  • Exercise on building a risk model

Case study: operational risk types and events (Bank of Scotland record keeping)

Module 3: Drivers for operational risk

  • The regulatory and business drivers – making a business case
  • The Basel II Accord
  • The Basel II definition of Operational risk
  • Basel III changes: Impact on operational risk management and future directions
  • Other regulations with operational risk implication
  • Why do banks manage their operational risk?
  • Discussion: the impact of cross-border regulation

Module 4: Internal and external loss data

  • Types of losses – actual, near misses and predictive incidents
  • Loss recording and internal loss data
  • Gross loss vs. net loss
  • The problems of loss data collection
  • Use of external data
  • The two types of external loss data
  • Public
  • and pooled data
  • Making external data relevant to your organisation

Module 5: Risk-derived capital and operational risk measurement

  • What is capital?
  • Uses of capital and capital adequacy
  • Regulatory and economic capital
  • Operational risk measurement and OpVaR
  • Basel II measurement approaches:
  • the Basic Indicator,
  • Standard
  • Advanced Measurement Approaches
  • The IMA, LDA and Scorecard methods
  • Basic problems of the measurement approaches

Module 6: Mitigating operational risk

  • What is operational risk mitigation?
  • The objective of operational risk mitigation
  • Mitigation techniques
  • severity
  • likelihood
  • The mitigation process
  • Inherent, residual and target risk levels
  • The challenges of implementing effective controls

Case study: identifying appropriate mitigating techniques

Module 7: Operational risk management

  • Risk governance
  • Risk committees, the CRO and the risk advisory director
  • The three lines of defence
  • Operational risk management activities
  • Identification, assessment, measurement, mitigation/control and monitoring and reporting
  • Building the operational risk framework
  • Best ways to collect risk data
  • Sound practices for the management and supervision of operational risk
  • Assess or measure?
  • Defining your risk appetite
  • Getting commitment from all parties

Case study – the HBOS risk management whistle blowing incident

Module 8: Monitoring, event management and reporting

  • Monitoring operational risk
  • Event management
  • Event reporting and monitoring
  • Progress monitoring and closing events
  • Reporting process – how to build reports

Case study: assessing and reporting the root cause of an event

Module 9: Key risk indicators

  • What are KRIs?
  • Types of KRIs
  • The role and structure of effective KRIs
  • Developing and designing key risk indicators
  • Implementing and evaluating KRIs
  • Thresholds and reporting
  • What are the true benefits of KRIs?

Case study: setting thresholds on KRI

Module 10: Risk and control self assessment

  • What is a RCSA?
  • What is the objective of risk and control self assessment?
  • RCSA approaches
  • Demonstration of the typical technique applied
  • Review of the level of accuracy of data produced
  • Consideration of the problems with risk and control self assessment

Case study: carrying out an RCSA

Module 11: Stress testing and scenario analysis

  • What is stress testing?
  • The topology and uses of stress testing
  • What is scenario analysis
  • Uses of scenario analysis
  • Developing credible scenarios
  • How does stress testing differ from scenario analysis
  • What is a suitable stress test?

Case Study

Module 12: Risk frameworks

  • COSO
  • ISO 31000
  • Comparing COSO and ISO 31000
  • Other risk standards
  • Governance codes

Module 13: Implementing an operational risk management facility

  • Planning, business and programme considerations
  • Project governance
  • Strategic steps and scoping
  • Analysis and design
  • Choosing software products
  • Implementation
  • Cut-over and operational running

Module 14: Other key issues

  • The role of insurance
  • Supervision of operational risk
  • Supervisory Review Process (SREP)
  • Internal Capital Adequacy Assessment Process (ICAAP)
  • Basel operational risk disclosure
  • Outsourcing and operational risk
  • Business continuity management and outsourcing

Module 15: Bringing it all together

  • Regulation in practice
  • The risk culture
  • What are the problems of implementing operational risk?
  • The regulators view
  • The future – where next?
  • Summary


Course Venue:London EC2

Course Duration: 3 days

Fee: £2,395 + VAT

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