Since the global financial crisis, corporate board members and senior staff have been under pressure to enhance their understandings of risk management.
In the UK this has been formalized into law through the Corporate Governance Code, and similar measures are taking root across the globe. In particular, non-executive directors are now required by most large institutions to demonstrate some understanding of risk management to undertake oversight responsibilities.
This course is designed to help you understand how to respond to this challenge.
This course will walk participants through each of the essential processes of financial and operational risk management highlighting areas where they must be in a position to challenge the risk management function.
We then give considerable attention to the formation of the board’s risk sub-committee, discussing when it should take form, how it should make style and how it should function concerning the board’s audit committee in particular.
Participants should leave the course with some confidence that they understand the scope and purpose of risk management in their organization as well as with some ability to take a critical stance while executing their oversight duties.
In this 3-day course participants are shown:
• The intended role of directors and senior executives in overseeing, understanding and leveraging risk management
• The envisaged role of directors in light of the Walker Report, OECD reports, The Turner Review and other commentaries
• How to establish executive risk management committees
• How to establish a risk profile and risk appetite
• The purpose, process, and function of the core risk areas: credit, market and operational
• How to understand these risk exposures in relation to the company’s overall core business operations
• How information from these functions should be reported and technological and IT considerations
• Primary questions to ask of risk management heads during the oversight process
• How and when to form a risk committee
• How the risk committee should be structured and function in relation to other committees, particularly the audit committee
• Risk management within the context of major initiatives (e.g., Basel III and its Internal Capital Adequacy Assessment Process (ICAAP)
This course is endorsed by GARP.
You might be interested in another Management programs as a next step.
YOU WILL LEARN HOW TO
On completion of this innovative 3-day course, you will be able to:
-Gain a better understanding of the role of directors and senior executives in overseeing, understanding and leveraging risk management
-Understand the envisaged part of directors in light of the Walker Report, OECD reports, The Turner Review and other commentaries
-Learn how to establish executive risk management committees
-Learn how to create a risk profile and risk appetite
-Understand the purpose, process, and function of the core risk areas: credit, market and operational
-Understand these risk exposures in relation to the company’s overall core business operations
-Learn how information from these functions should be reported and technological and IT considerations
-Gain a better understanding of the primary questions to ask of risk management heads during the oversight process
-Learn how and when to form a risk committee
-Learn how the risk committee should be structured and function in relation to other committees, particularly the audit committee
-Understand risk management within the context of major initiatives (e.g., Basel III and its Internal Capital Adequacy Assessment Process (ICAAP)
IMPORTANT COURSE INFORMATION
Participants who fully attend this course and complete the test on the last day will receive a Strategic Axis Professional Certificate (SAPC). SAPC certificates are regionally recognized and can be quite valuable when applying for more senior roles within the organization or outside.
This course is credited by GARP – Global Association of Risk Professionals (GARP)
COURSE OUTLINE
What risk management is meant to do for the institution
- Goals and objectives
- Tools and device
How risk management is meant to work
- How risk events are meant to be reported
- How losses and exposures are meant to be addressed
The role of executives and board members in overseeing risk management
- Risk management oversight
- Forecasts of future problems and opportunities
- How risk management can be used in strategy
Benchmarking your institution’s risk management effectiveness and quality to that of competitors
Important terminology (in relation to risk management methods, derivatives, market instruments and their function)
Important initiatives for financial institutions (Basel III, CAD II, Solvency II)
What risk management is meant to do for the institution
- Goals and objectives
- Tools and device
How risk management is meant to work
- How risk events are meant to be reported
- How losses and exposures are meant to be addressed
The role of executives and board members in overseeing risk management
- Risk management oversight
- Forecasts of future problems and opportunities
- How risk management can be used in strategy
Benchmarking your institution’s risk management effectiveness and quality to that of competitors
Important terminology (in relation to risk management methods, derivatives, market instruments and their function)
Important initiatives for financial institutions (Basel III, CAD II, Solvency II)
Module 2: How to undertake compliance with initiatives
ICAAP for executives
Benchmark examples
UK FSA guidelines
Samples from various regulators
Exploration of important contents
Executive Summary
Capital Adequacy determination
Capital Planning
Use of the ICAAP
How the ICAAP should be implemented & used at the board level
Module 3: Board Oversight of Financial Risk
Identifying and understanding FX exposure
Defining FX losses
Operational hedging vs. Financial Hedging
Formation of an executive sub-committee
Structuring of the FX risk management apparatus
Structuring reporting: How losses and exposure can be communicated to the board and senior managers
Establishing an FX Risk Management policy
Benchmarking practices
Gathering an understanding of the institution’s FX risk profile
Tools for assessing FX exposure
Tools for monitoring and managing FX exposure
FX Model testing and Backtesting: What executives and the board needs to know in interpreting the results
Glossary of important FX terms
Module 4: Overseeing Credit Risks
Identifying and understanding credit risk exposure
Defining Credit losses
Corporate Credit versus Financial institution credit
Formation of an executive sub-committee
Structuring of the credit risk management apparatus
Structuring reporting: How losses and exposure can be communicated to the board and senior managers
Establishing a Credit Risk Management policy
Benchmarking practices
Gathering an understanding of the institution’s Credit risk profile
Tools for assessing Credit exposure
Client and customer ratings
Trade-credit ratings
Tools for credit monitoring
Establishing the monitoring function
Evaluating the monitoring function
Costly initiatives that must be considered
Data quality and database development
Information technology considerations
Personnel and human resource considerations
Credit model testing and stress testing: What executives and board members need to know in interpreting and using the results
Deciding how much in terms of resources to dedicate to credit risk management
Glossary of important credit terms
Module 5: Overseeing Funding and Liquidity Risks
Identifying and understanding liquidity risk exposure
Defining liquidity-related losses
Formation of an executive sub-committee and collaboration with ALCO
Structuring of the liquidity risk management apparatus
Structuring reporting: How losses and exposure can be communicated to the board and senior managers
Establishing a Liquidity Risk Management policy
Benchmarking practices
Gathering an understanding of the institution’s Liquidity risk profile
Tools for assessing Liquidity risk exposure
Tools for liquidity risk monitoring
Glossary of significant liquidity risk related terms
Module 6: Overseeing Hazard/Operational Risk
Understanding operational risk importance
Operational risk exposures
Hazards and vulnerabilities
How items excluded from the operational risk definition affect executive decision-making
Formation of an executive operational risk committee
Creation of functional risk policy and management manual
Additional terminology
Regulatory initiatives for financial institutions (Basel II, Standardised, and Advanced Measurement Approaches)
Establishing an executive risk tolerance level for operational risk exposure
Gathering the tools for operational risk management
Data considerations
Personnel considerations
Information technology considerations
Governance considerations
Deciding what operational risk approaches to take
Determining how much regarding resources to dedicate to executive risk management
Module 7: Overseeing Strategic Risk
Identifying and understanding Strategic/Competitive risk exposure
Defining Strategic losses
Reconciliation with operational risks and other risks
Structuring of the strategic risk management apparatus
Structuring reporting: How failures and exposure can be communicated to the board and senior managers
Establishing a Strategic Risk Management policy (if necessary)
Benchmarking practices
Gathering an understanding of the institution’s Strategic risk profile
Tools for assessing Strategic risk exposure
Apparatus for monitoring and managing Strategic risk exposure
