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.
- Ability to detect and control the potential for fraud and manipulation.
- 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.
- Understand and define the emerging/evolving role of today’s CRO 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.
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.
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.
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
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:
- Achieving first time quality.
- The management of quality.
- The use of optimum control points.
- Key risk controls.
- Cause and effect analysis.
- Generic cause factors
The role of responsibility management:
- Its use in controlling risk.
- How to implement.
- Empowerment.
- Allocation and acceptance of responsibility.
- The dangers of short term strategies.
Day 2
The BIS/BASEL Accord as it relates to operational risk:
- Key points in new Basel II Capital Accord.
- Discussion on the implications for risk managers.
- Main objectives and implementation plan.
- Implement an operational risk management function within an “enterprise risk management” structure.
Organisation and reporting lines:
- Establish best practice reporting structure which includes:-
- The Board.
- CEO COO CRO.
- Line managers, risk managers, audit and compliance.
- Analytical applications detecting, analysing and controlling risk elements.
Build an operational risk scoring process:
- Review of the major types of operational risks.
- Measurement framework.
- Scoring approaches.
- Key performance and key risk indicators.
- Critical success factors.
Example of an operational risk model:
- Identification and prioritisation of key risk factors.
- Prioritising of operational risk drivers.
- Establishing a risk hierarchy.
- Event magnitude and frequency measurements.
- Group discussion on the benefits / pitfalls of risk models and measurement systems.
Day 3
Controlling costs and losses:
- Visible and invisible risks and losses.
- Cash management.
- Non-earning assets.
- Error, fines and losses.
- Margin controls.
- Cost reductions.
The use of limits as a control mechanism:
- Guidance limits and mandatory limits.
- Positions.
- Volumes.
- Credit/settlement.
- Outstandings.
The Role of Management Information in Controlling Risk:
- Highlighting risk areas and non-compliance.
- Documenting and authorisation of exceptions / excesses.
- Reports design / structure.
- Getting focussed.
The systematic control process workshop:
An analysis of the control process from initiation through to settlement and reconciliation with detailed examination of:
- Pre-Dealing controls.
- Dealing controls.
- Middle office functionality.
- Processing controls.
- Payment.
- Position.
- Reconciliation.
- Accounting.
- Documentation.
- Reporting.
- Compliance.
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.
Day 4
New products steering committee:
- Disaster recovery.
- Systems security.
- Sensitivity testing /stress testing.
- Hedging to reduce risk.
- Hedge products.
- The process of hedging.
The role of the middle office in controlling and mitigating risk:
- Middle office functionality explained.
- The middle office as the catalyst for control.
- The training and development role.
- The co-ordinator.
Portfolio controls:
- The use of portfolio controls to control risk.
- Trading - investment - arbitrage - hedging.
- Managed Asset Portfolios (MAPS).
- Discretionary funds.
Course summary and close
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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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