Essentials of Operational Risk Workshop

CORE COMPETENCIES: Operational Risk Track

Excel Focused Technical Skill Development

2 DAY WORKSHOP
(Workshop is not being offered at this time)

Qualifies for CPD and 14 CPE Credits

INTRODUCTION

Although most companies are eager to understand how to effectively measure and manage operational risk, it remains one of the most challenging areas of risk management. Operational risk includes concerns about issues such as transaction processing errors, liability situations, and back-office failure. This course will provide delegates with a clear, definitive understanding of operational risk, its relationship to market and credit risk, operational risk models, methods and analysis, and the role of operational risk in the Basel II Accord. Delegates will complete the workshop with the knowledge of how to establish an operational risk framework in their institution. This intensive and highly interactive course includes the latest practical and theoretical developments in operational risk analysis and management and offers practical case studies and group activities to reinforce both the various concepts and the relationship among these concepts.We strongly encourage delegates to ask questions to maximize benefit. There will be adequate time allocated for refreshment breaks, lunch and for delegates to network and discuss the issues being addressed.

Who should attend?

This intensive and interactive training course is designed for practitioners, with a base knowledge of risk management but limited knowledge of operational risk measurement and management. As its primary objective, the course aims to provide a clear understanding of operational risk and how to establish an effective operational risk framework.

What will you get out of this course?

• Gain understanding of operational risk models, methods and analysis

• Learn the relationship and interactions between operational risks and market and credit risks

• Understand how to calculate operational risk Value-at-Risk.

• Examine the role of operational risk in the Basel II Accord

• Examine case vignettes and real-world operational risk examples

COURSE OVERVIEW AND OUTLINE

For this intensive and highly interactive course, all delegates are strongly recommended to attend the workshop with a laptop computer loaded with Microsoft Excel.

Getting started with operational risk

• Essentials of quantifying risk

• The basics of market and credit VaR

• Economic vs. regulatory capital

• Introduction to risk management analytical tools

• Database modeling

• Developing internal risk policies and risk education programs

Developing the operational risk VaR

• Developing frequency and severity models

• Differences between market and credit VaR to operational VaR

• Aggregating severity and frequency

• Use of Monte Carlo simulation

• Estimating confidence interval and parameters bias

• Jackknife and bootstrapping techniques

• Validation and back testing techniques

• Including insurance in the calculation

Developing causal models and structured stress tests for operational risk

• Linking the losses to causal factors

• Designing root cause analysis

• Bayesian models

• Designing multifactor models

• Case study and practical examples

Defining and understanding the importance of operational risk

• Basel II and the impact to operational risk

• Definition and classifications

• Capital charges

• Cross border issues

• AMA

• Implementation challenges

• The role of complex and sophisticated IT systems

• Effective communication and uniform guidelines

Analyzing specific operational risky types

• Individual and group blunders

• Fraud, incompetence and reporting structures

• Systems, technology and operations

• Processes and documentation

Managing operational risk – establishing an operational risk framework

• Establishing a risk based culture

• Clear reporting structures – top-down and bottom-up

• Getting senior management buy-in

• The role and responsibility individuals within a department

• Reporting structures

• CASE STUDY: Attendees will be given an exercise on how to combine both measurement and management of operational risk

Operational risk mitigation – the role of insurance

• Assessment

• Measurement

• Control

• Financing