OBJECTIVE:

The Seminar focuses on the concepts of Credit and Operational risk introduced under Basel II.  It first places Basel II in a broad business context of being a driver for improvement in risk management and corporate governance practices. It also places operational risk in the overall context of the new capital adequacy calculations of Basel II. 

THE NEW CAPITAL ACCORD 

• Background & history
• The original capital ratios & their limitations
• Basel II – developments, timetable & scope
• Basel I & Basel II – a comparison
• The three pillars of Basel II

RISK MANAGEMENT FUNDAMENTALS

• What is risk?
• The essentials for an effective Enterprise wide Risk Management process
• Understanding the risk cycle
• Impact & probability
• Effective internal controls
• Financial risk management and the theory of risk & return
• How Basel II applies modern risk management techniques

CREDIT RISK MANAGEMENT

• Utilising a risk evaluation framework
• Five key areas of business performance-Non Financial factors
• Reviewing the financial factors
• Computer based spread sheets and industry sector reports
• Determining a Risk Grading
• Pricing-Risk v Return

ASSET QUALITY RISK

• The value of the process
• Common causes of delinquency
• Effective credit management
• Asset monitoring quality ratios
• Credit risk grading systems
• Cash flow debt service ratios
• The goals of loan management: workout v default.
• Introducing the systematic/diagrammatic approach to the topic
• Predicting Business Failure-Scoring Models
• Introduction to Key Risk quantification Concepts and Definitions

RISK GOVERNANCE

• The need for capital adequacy in the financial services sector
• Examples of new corporate governance standards
• Sarbanes-Oxley Act (USA)
• Combined Code (UK)
• The essential link between corporate governance & risk management
• Basel II Pillars 2 & 3 – an introduction
• How to achieve true “risk governance”
• risk committees and the role of the Chief Risk Officer
• the role of audit
• changing culture and embedding risk processes

OPERATIONAL RISK OVERVIEW

• What is operational risk?
• Basel II definitions
• Practical examples of operational risk

QUANTIFYING OPERATIONAL RISK

• Capital requirement calculations
• Basic Indicator Approach
• Standardized Approach
• Alternative Standardized Approach
• Advanced Measurement Approach (AMA)
• Data requirements of Basel II
• Focus session – what the AMA approach means in practice

OPERATIONAL RISK & GOVERNANCE (PILLARS 2 & 3)

• Pillar 2 (regulatory review)
• Create risk aware culture
• Identify & assess risks
• Risk event handling (event recording & data base)
• Pillar 3 (disclosure & market discipline)
• Strategies & performance for operational risk management
• A practical guide to managing operational risk