Risk and Regulation in Banks

3 Day Workshop
(Workshop is not being offered at this time)

Introduction

Across the globe regulators are increasingly linking the amount of risk taken by a bank to the amount of capital it is required to hold. In fact many banks and financial services are increasingly being managed on risk-based management practices. It is important that all financial services professionals have an understanding of risk management and risk-based regulation. In fact recent events in the global financial market have highlighted just how important it is for banks to a have a firm understanding and management of its risks across the entire enterprise. This seminar is designed as an introduction to the various types of banking risk and risk-based regulation.

• the explanation of risk-based regulation
• description of the three tiers of the Accord - capital allocation, supervision and disclosure
• gain an understanding of the three  Pillar 1 risks and three other key risks identified by Pillar 2
• how capital allocations are calculated for Pillar 1 risks
• best practice methodologies for the management of the five main risks.

Objectives

The objective of this course is to give an introduction to banking risks and regulation, specifically:

• explanation of the eight major risks encountered in banking
• the  main features of the Basel Accord and the three Pillars
• the management and measurement of the three risk covered under Pillar 1
• the risks managed and measured under the Accord’s Pillar 2 requirements
• supervision and disclosure requirements (Pillar 2 and Pillar 3)

Who should attend this seminar?

This course is intended those either new to risk management, new to risk-based regulation or who wish to gain an understanding of the Basel regulations. It will be of use to:

• risk managers and analysts
• senior management
• investment banking professionals
• treasury professionals
• balance sheet and capital managers
• asset and liability managers and analysts
• it and operations professionals
• internal and external auditors
• compliance personnel
• regulators and supervisory professionals
• business managers and team leaders
• anyone new to risk management within financial services
• suppliers and consultants to banks and the risk management industry
• anyone planning to take or taking GARP’s International Certificate in Banking Risk and Regulation

Pre-requisites

No prior experience of risk-based management or of the Basel II Accord is required as this course first covers the basics before moving on to more advanced topics. However it is assumed that all delegates are familiar with common financial terms and have a basic understanding of banking and the functions of a financial institution. 

Content

DAY 1 – Fundamentals of risk-based regulation

An introduction to risk

• What is risk and why should banks manage it?
• An introduction to the major types of risk
  • Market risk
  • Credit risk
  • Operational risk
  • Other types of risk
• The potential consequences of failing to manage risks in banks
• The main risk-based regulations
• Case Study

The Basel I and Basel II Accords

• The development of international banking risk regulation
• The Basel I Accord and the Market Risk Amendment
• The Basel II Accord
• Capital under Basel II

Market risk

• What is market risk?
• Market activities and why trade
• The main market instruments
  • Cash instruments
  • Derivative instruments
• Managing market risk

DAY 2 – Market risk and credit risk

Calculating Market Risk under Basel II      

• Value at Risk
• Market risk models and approaches
• The Standardised Approach            
• The Internal Model Approach          
• Obtaining approval for an internal model

Credit risk

• What is credit risk
• The credit time line& risk parameters
• Mitigating and managing credit risk
• Case study

Calculating credit risk capital under Basel II         

• The Standardised Approach
• The Internal Ratings-Based approaches       
• Obtaining approval for using a measurement approach
• Collateral, securitization, and credit derivatives
• Exercise

DAY 3 – Operational risk, supervision and disclosure

Operational risk

• What is operational risk and why is it important?
• Risk of loss, expected and unexpected losses
• Operational risk event types
• Operational risk management
• Case study

Calculating operational risk capital under Basel II

• What is operational risk measurement
• The Basic Indicator Approach
• The Standardised Approach
• The Advanced Measurement Approach
• Obtaining approval for using a measurement approach
• Exercise

Pillar 2 risks 

• Interest rate risk in the banking book
• Liquidity risk
• ‘Other’ risks

Supervision & disclosure – Pillar 2 and 3

• What is supervision and disclosure
• Home/host supervisory co-operation
• The Basel II principles of supervision
• The Basel II principles of disclosure

You may also be interested in GARP's International Certificate in Banking Risk and Regulation.  Click here to learn more.