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Course Outline

An introduction to risk

  • What is risk and why should banks manage it?
  • Is risk merely a negative experience?
  • The global nature of banking and risks.
  • An introduction to the major types of risk in banks.
  • The potential consequences of failing to manage risks in banks.
  • Risk Appetite.
  • Risk Management.

Case study

International risk regulations

  • What are risk-based regulations?
  • Linking risk with capital.
  • What is capital adequacy?
  • Key international regulations:
    • Basel Accord.
    • Sarbanes-Oxley.

Case Study

The Basel Accords

  • The development of international banking risk regulation.
  • The objectives of banking risks.
  • The challenge of global regulations.
  • The Basel I Accord and the Market Risk Amendment.
  • The Basel II Accord.
  • Capital under Basel II.
  • Basel 2.5 and Basel III:
    • The leverage ratio.
    • Countercyclical capital buffer.
    • Systemic interconnectedness.

Case study: Capital under Basel III

Market risk

  • What is market risk?
  • Market activities and the rationale for trading.
  • The main market instruments:
    • Cash instruments.
    • Derivative instruments.
  • Managing market risk.
  • Market risk measurement and management.
  • Market risk regulation:
    • Basel II.
    • Basel III.

Case study: The consequences of mis-managing market risk – JP Morgan

Credit risk

  • What is credit risk?
  • Credit products in an international market.
  • Mitigating and managing credit risk.
  • The credit process.
  • The credit analysis process.
  • Portfolio Management.
  • Credit risk measurement.
  • Credit risk regulation:
    • Basel II.
    • Basel III.

Case study

Operational risk

  • What is operational risk and why is it important?
  • Risk of loss, expected and unexpected losses.
  • Operational risk event types.
  • Three lines of defence.
  • Operational risk management.
  • Operational risk management framework.
  • Where to start?
  • Who does operational risk management report to?
  • What is included under operational risk management?
  • Measuring and assessing operational risk.
  • Operational risk regulation:
    • Basel II.
    • Basel III.

Case study: UBS

Liquidity risk

  • What is liquidity risk?
  • Types of liquidity.
  • Consequences of not managing your liquidity.
  • Sources of liquidity.
  • Measuring liquidity.
  • Stress testing.
  • Managing liquidity.
  • Liquidity risk regulation:
    • Basel II.
    • Basel III.

Case study:

Asset and Liability Management and other risks

  • What is Asset and Liability Management?
  • ALCOs and Treasuries.
  • Banking book versus Trading Book.
  • Interest rate risk in the banking book.
  • Measuring and managing IRRBB:
    • Contractual versus behavioural.
    • Stress testing.
  • ‘Other’ risks.

Case study:

Supervision & disclosure

  • What is supervision and disclosure?
  • Home/host supervisory co-operation.
  • The ICAAP.
  • Supervision and disclosure under Basel.
  • The Basel III changes.

Case study:

Defining Enterprise Risk Management

  • What is ERM?
  • The benefits of ERM.
  • The ERM process.
  • The risk management function.
  • Portfolio management.
  • New product development.
  • Basel Committee guidance.
  • Commonly adopted frameworks.

Case study

Integrated risk management

  • Integrating risks across the bank.
  • Risk committees.
  • Risk policies.
  • Risk recognition and assessment.
  • Adding risk across risk types.
  • Economic capital.
  • Interaction between risk types.

Case study

Corporate Governance

  • What is corporate governance?
  • Who are the stakeholders and what are the conflicts between them?
  • What are the benefits of good corporate governance?
  • Development of corporate governance - Cadbury, Walker, Hicks reports.
  • The external view of Corporate Governance (rating agencies, regulators).

Case study: Can a bank be “Too big to manage”?

Good corporate governance

  • Corporate structures.
  • The role of non-executive directors.
  • Techniques and strategies.
  • Committees and management practices.
  • Communication.
  • The role of senior management.
  • Internal framework of Corporate Governance.
  • OECD and Basel guidance.

Case study:

Risk Governance

  • Risk management governance.
  • Creating a culture of risk awareness.
  • Implementing a risk culture.
  • Risk management committees.
  • Governance, risk and compliance.

Case study:

The future

  • The new regulatory regime:
    • Implications for the banking industry.
    • Implications for regulators.
  • Priorities in the global banking regulatory agenda.
  • Future flashpoints.
 35 Hours

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