Course dates
An extensive but very practical training workshop designed to provide practitioners with:
- A systematic approach to the control of all operational risks within an ERM culture
- A pre-emptive control strategy providing the ability to identify, monitor and control those key areas of exposure
- The skills to analyse, measure and manage, operational risk, using best practice techniques, in line with Basel II requirement
- The ability to detect and control the potential for fraud and manipulation
- The knowledge of how to protect your Institution against a 'rogue trader'
- An introduction to the latest responsibility management philosophy and practice which will create the correct environment for high quality, risk mitigation and success
- The ability to understand and define the emerging/evolving role of today's C.R.O. and other risk departments
- The experience to develop a properly focused management information structure to promote risk awareness and facilitate control
- The knowledge to identify, control and reduce both visible and hidden costs
The issue of risk
Risk cannot be eliminated from the trading, processing and control cycle, for without risk there can be no profit. It follows that those companies that can most effectively control risk will be the most successful. Operational risk is present in many different forms and small problems can quickly escalate into major losses if not prevented at source. Any effective control system must therefore be preventive as well as reactive and must cover all areas of the company's operations.
Course content
This course will show delegates how the correct mix of philosophical and operational elements combine together to ensure success. It provides a simple structure for control and automatic mechanisms for detection and resolution of problems, using an evolutionary approach.
A series of real life case studies vividly illustrate where problems originate and how they can be solved in a simple systematic way. They are delivered using a participative and highly inter-active style of delivery by mature practitioners with many years of successful experience of risk control, in a wide range of activities.
The systematic approach
The control process must be part of a co-ordinated risk control strategy, centrally managed and operated by highly experienced and skilled operatives. Recent experience has shown that expensive and highly complex technical risk detection and quantification systems have not, in themselves, prevented the huge losses that have occurred. In some respects they have tended to overcomplicate and cloud the basic issues involved.
There is no substitute for a highly experienced and well motivated work force and those that ignore this do so at their peril. In fact, the solution to this problem is far easier than is supposed . A simple analysis of why difficulties have occurred lead us to the conclusion that the same, basic, generic cause elements were present in each case and detection and prevention could have been very easily achieved.
Who should attend?
The course will be of value to professionals in the following areas:
- Senior and Middle Management who are concerned about Risk
- Compliance Staff
- Operations Managers
- Accountants and Consultants
- Middle Office and Risk Managers
- Financial and Product Control Staff
- Treasury Managers
- Auditors and Internal Control Officers
- IT and EDP Operatives
Crucial benefits of attending
- Find a systematic and simple way to solve your most difficult problems
- Understand the crucial role of a responsible management philosophy in controlling risk
- Develop the skills to provide focused information media which will provide the catalyst for effective risk control
- Recognise the value of an experienced and well motivated operational risk team
- Learn how to focus on those few important areas, rather than get bogged down with trivia
To find out more about accommodation, and places of interest within Paris please visit: http://en.parisinfo.com/
Day 1
Defining Operational Risk
The opening session will clearly define the elements of operational risk and introduce delegates to the value of a quality environment and the need for a sound and responsible management philosophy.
The Role of Quality in Controlling and Reducing Risk
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Achieving first time quality
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The management of quality
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The use of optimum control points
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Key risk controls
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Cause and effect analysis
- Generic cause factors
Case Studies: Problem Origination and Escalation. This case study will show how big problems and risks can originate from relatively insignificant cause elements and how these problems can be prevented at source.
Video 'The fall of Barings Bank', followed by group discussion concentrating on internal and external failures and its relevance to today’s highly complex and changing environment.
The Role of Responsibility Management
Day 2
The BIS/BASEL Accord as it relates to Operational Risk
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Key points in new Basel II Capital Accord
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Discussion on the implications for Risk Managers
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Main objectives and implementation plan.
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Implement an Operational Risk Management Function within an “Enterprise Risk Management” structure.
Organisation and reporting lines
Establish best practice reporting structure which includes:
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The Board
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CEO COO CRO
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Line managers, risk managers, audit and compliance.
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Analytical Applications Detecting, analysing and controlling risk elements
Build an operational risk scoring process
Example of a operational risk model
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Identification and Prioritisation of key risk factors
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Prioritizing of operational risk drivers
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Establishing a risk hierachy
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Event magnitude and frequency measurements
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Group discussion on the benefits / pit falls of risk models and measurement systems
Day 3
Controlling Costs and Losses
The use of limits as a control mechanism
Case Studies: the use of stop loss limits
The Role of Management Information in Controlling Risk
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Highlighting risk areas and non-compliance
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Documenting and authorisation of exceptions / excesses
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Reports design / structure
- Getting focussed
Case Study: LTCM Hedge fund
Group discussion of its relevance on today’s financial and operational risks.
The systematic control process workshop
An analysis of the control process from initiation through to settlement and reconcilliation with detailed examination of:
This section will take the delegate on a step by step journey through every stage of the process with real life case studies and examples of problems, risks controls and solutions. It will provide a generic and systematic control process to limit and control risk at every stage.
Case studies and real life examples including back office frauds.
Day 4
Case Study – Allied Irish Bank (Allfirst).
This case study will clearly highlight how a lack of propercontrols, knowledge and infrastructure can have such devastating consequences. It will also show how this could have been identified and easily prevented.
New products steering committee
Disaster recovery
Hedging to reduce risk
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Hedge products
- The process of hedging
Case Study: How to hedge using Derivative Products.
The role of the middle office in controlling and mitigating risk
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Middle office functionality explained
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The middle office as the catalyst for control
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The training & development role
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The co-ordinator
Portfolio Controls
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The use of portfolio controls to control risk
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Trading - Investment - Arbitrage - Hedging
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Managed Asset Portfolios (MAPS)
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Discretionary Funds
Case Study: group discussion re “The biggest fraud case in banking history”
Societe Generale Paris. Despite Millions of US$ spent on highly developed IT and Risk management systems, one person was allowed to go undetected for years building up positions of $50 billion and fantastic losses of some US$10 BILLION!
Societe Generale is just another failure in a very very long line of Banking failures/crisis in which the only real difference is the size of the actual loss. This session will clearly demonstrate how the Middle office/Back Office and other departments with responsibilities for risk could have easily prevented this fraud.
Course summary and close
Centrally located hotel in Paris, Paris, France
This programme takes place on a non-residential basis at a hotel in central Paris. Non-residential course fees include training facilities, documentation, lunches and refreshments for the duration of the programme. Delegates are responsible for arranging their own accommodation, however, a list of convenient hotels (many at specially negotiated rates) is available upon registration.
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Kevin Merry
Kevin is a leading international trainer and consultant with over 27 years extensive experience with major “blue chip” financial institutions including JP Morgan, CIBC, Mizhuo and other leading global banks. Kevin now specialises in training and focuses on five main areas: "Operational Risk Management & Measurement", "Back Office Management", "Effective Middle Office", “Auditing” and "Understanding Financial Products".
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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.
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Course dates