Course overview
'Financial Risk Management' is designed to bring delegates the essential techniques in managing financial risks. It provides an all-round understanding of the tactics as well as the practical applications of the most commonly used instruments to manage market risks. Delegates will leave this course understanding the necessary risk identification and risk management techniques as well as learning what approaches banks and large corporates use to measure and to control market risk.
Summary of course content
- Understand the risk management function
- Define your risk management function - consider tools to reduce the conflict between risk managers and traders
- Apply financial instruments (derivatives and non-derivatives) to manage treasury rate risk
- Assess and manage foreign exchange exposure
- Understand the limitations of credit risk VaR
- Explore the issue with Credit Default Swaps
- Discuss the latest developments in liquidity risk management
- Understand Collateralised Debt Obligations (CDOs)
Methodology
As with all Euromoney Training courses, this programme makes use of case studies and class exercises to ensure that you can apply your learning as soon as you return to your office.
Who should attend this training course?
- Risk managers
- Pension fund managers and trustees
- CFOs / Finance Directors
- Systems developers for trading and risk management
- Head of treasury / treasury managers / sales
- Investment analysts
- Internal auditors
- Risk and compliance managers
- Credit managers
- Investment / fund managers
- Operations managers
Supporting publications
DAY ONE
Overview of risk management
- What is financial risk management?
- Definition of risk and risk management
- Role of risk management
- Types of risk
- Principles of risk management
Market participants
- Banks and financial institutions
- Corporates
- Fund managers
- Liability managers
Types of risks
- Market risk
- Credit risk
- Liquidity risk
- Operational risk
- Integrated or enterprise wide risk management
The risk management process
- What does the process bring to an organisation?
- What can a risk management standard offer us?
- AS4360
- COSO
- New ISO 31000
Risks in context
- Understand the organisation
- Constraints and requirements
How to identify risk
- Identify the potential sources of risk
- Identify the actual risks
- What about future risks?
Measure the risks
- Quantitative techniques
- Qualitative techniques
Managing the risks
Risk treatments
Avoid
Reduce
Share
Accept
Core risk management practices
Risk management controls
- Policy documents
- Procedural documents
- Internal controls
Monitoring risk
- Monitor
- KRI, KPI, KCI
- Communication
- Reporting
- Reviewing
Risk management function
- Organisational structures for risk management
- Financial risk management performance
- Non-financial institution vs. bank
- Market risk unit
- Auditors
Regulation of financial institutions
- Industry standards
- Basel II
Case study: culture vs. risk
Enron part 1
DAY TWO
What is risk management?
How does market risk fit in?
- Definition of market risk
- Why focus on market risk?
- Causes of market risk (FX and IR, energy, commodity and equity)
- Traded on non-traded market risk
Policy and context
- Strategy - hedging and trading
- Scope
The risk management process (4 parts)
Identify market risk
Exercise: identifying market risk
Measurement of market risk
- What is market value?
- Value based limits
- VaR overview - three methods
- Systems - weakness and problems as highlighted by current issue
Management of market risk
- ALCO
- Middle office
- Revaluation issues
- Limits and limit management
- Back testing
- Sensitive's
- Stress testing
- Processes
- Products
Monitoring and reporting of market risk
- Governance principles
- Style of reporting
- Information
- Frequency
- Internal and external reporting
- AASB 139 and AASB 7 impact on reporting and pricing
- Barings Bank losses - market or operational risk?
- Best practice in market risk management
- Credit crisis, liquidity crisis or market risk?
- How do they link together?
Derivative hedging instruments
- Forward contracts
- Futures contracts
- Forward rate agreements
Swaps
Options
FX products
Case study: annual report of FI
Case study: Enron part 2
DAY THREE
Credit risk management of financial products
How does credit risk fit in?
- Definition
- Categories of credit risk
- Causes of credit risk
- What is the credit crunch?
- What are sub-prime loans?
- From sub-prime to global credit crunch
Policy
- Strategy
- Scope
- Credit risks within the banking system
Regulatory issues
- Capital requirements of regulators
Measurement of credit risk
- Models
- Credit risk of derivatives and pre-settlement risk
- VaR overview
- Systems - weaknesses and problems
Overview of rating process
- Problems within the rating process
- What are CDOs?
- Why did they get an AAA rating?
Management of credit risk
What are credit derivatives?
Credit limits and ratings
Mitigation techniques
ISDA and Credit Support Annex
Collateral management
Unwinding and settlement issues arising from the credit crunch
Monitoring and reporting of credit risk
- Style
- Information
- Frequency
Review of risk in investment markets
- Asset Backed Securities (ABS)
- Residential Mortgage Backed Securities (RMBS)
- The role of rating agencies in risk management
Liquidity risk management
- Liquidity risk
- The new principles of liquidity risk management from BIS
- Management of market liquidity
- Management of funding liquidity
- Liquidity policy
- Liquidity risk in 07/08
- Lessons to be learnt
Case study: Bear Sterns
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Susan Campbell
Susan has over 25 years experience in the finance industry, with major banks and corporations in Melbourne and London. She started working with Macquarie Bank in the eighties after the float of the Aussie dollar before her move to London. There she became a corporate dealer with HSBC London dealing with interest rate and FX derivatives for Asian and European corporates. On returning to Australia, Susan was the Treasurer for Susan Corporation, a large national property and retail group. She then moved to a major listed mining company. For the last ten years Susan has run a successful consulting business, working with KPMG, Arthur Andersen, Barrington Corporate Finance and with various government bodies, financial
organisations and corporations specializing in treasury operations, transactional banking, risk management and internal controls and treasury systems.
Susan has been a senior lecturer at RMIT working in the undergraduate and masters programmes developing and presenting financial markets, treasury and risk management courses. She was responsible for the development of the Treasury Training Facility at RMIT. She has been a guest lecturer for the Graduate School at both RMIT and La Trobe University. Susan has a wide range of experience with various treasuries both in Australia, New Zealand and Asia and has done numerous projects which include reviewing/writing treasury policies, mapping treasury processes from a risk management perspective, conducting independent reviews of the treasury unit, formulating strategies and improving cost structures. In addition, Susan is the Finance and Treasury Policy advisor for CPA Australia covering systems, accounting and treasury issues is on the Finance and Treasury COE. Since 2005 Susan has been a non-executive director of Heritage building Society, the largest building society in Australia.
Susan is an internationally renowned presenter who has done extensive work with many leading institutions and national bodies. She has presented throughout Australia and Asia for various clients. Susan is on the Risk Management Taskforce for the Masters Degree for Finsia and is the author of The Guide to Financial Risk Management published by Thomson Reuters, Australia, and The Finance and Treasury Handbook published by Brookers, New Zealand, as well as numerous articles covering a wide range of financial markets.
Susan has a Bachelor of Commerce, University of Melbourne, a Graduate Diploma in Applied Finance and Investment, an MBA, RMIT and the Cert IV in Assessment and Workplace Training.
Interested in holding this course in-house? Please fill out your details and a member of our team will be in touch with more information.
This course has now expired please email us to find out when the course will next be running.