Euromoney Learning Solutions

Effective Risk Management Oversight for Board Members & Executives

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About the course

Executives, enhance your understanding of risk management with this course

Since the global financial crisis, corporate board members and senior staff have been under pressure to enhance their understandings of risk management.

In the UK this has been formalized into law through the Corporate Governance Code, and similar measures are taking root across the globe. In particular, non-executive directors are now required by most large institutions to demonstrate some understanding of risk management in order to undertake oversight responsibilities.

This course is designed to help you understand how to respond to this challenge.

On completion of this innovative 3-day course, you will be able to:

  • Gain a better understanding of the role of directors and senior executives in overseeing, understanding and leveraging risk management
  • Understand the envisaged role of directors in light of the Walker Report, OECD reports, The Turner Review and other commentaries
  • Learn how to establish executive risk management committees
  • Learn how to establish a risk profile and risk appetite
  • Understand the purpose, process and function of the core risk areas: credit, market and operational
  • Understand these risk exposures in relation to the company’s overall core business operations
  • Learn how information from these functions should be reported and technological and IT considerations
  • Gain a better understanding of the primary questions to ask of risk management heads during the oversight process
  • Learn how and when to form a risk committee
  • Learn how the risk committee should be structured and function in relation to other committees, particularly the audit committee
  • Understand risk management within the context of major initiatives (e.g., Basel III and its Internal Capital Adequacy Assessment Process (ICAAP)

This course is credited by GARP - Global Association of Risk Professionals (GARP)

Agenda

Day 1

Overview

What risk management is meant to do for the institution

  • Goals and objectives
  • Tools and device

How risk management is meant to work

  • How risk events are meant to be reported
  • How losses and exposures are meant to be addressed

The role of executives and board members in overseeing risk management

  • Risk management oversight
  • Forecasts of future problems and opportunities
  • How risk management can be used in strategy

Benchmarking your institution’s risk management effectiveness and quality to that of competitors

Important terminology (in relation to risk management methods, derivatives, market instruments and their function)

Important initiatives for financial institutions (Basel III, CAD II, Solvency II)

How to undertake compliance with initiatives

  • ICAAP for executives
  • Benchmark examples
  • UK FSA guidelines
  • Examples from various regulators
  • Exploration of important contents
  • Executive Summary
  • Capital Adequacy determination
  • Capital Planning
  • Use of the ICAAP
  • How the ICAAP should be implemented & used at the board level

Day 2

Board Oversight of Financial Risk

Overseeing FX Risk

  • Identifying and understanding FX exposure
  • Defining FX losses
  • Operational hedging vs. Financial Hedging
  • Formation of an executive sub-committee
  • Structuring of the FX risk management apparatus
  • Structuring reporting: How losses and exposure can be communicated to the board and senior managers
  • Establishing an FX Risk Management policy
  • Benchmarking practices
  • Gathering an understanding of the institution’s FX risk profile
  • Tools for assessing FX exposure
  • Tools for monitoring and managing FX exposure
  • FX Model testing and Backtesting: What executives and the board needs to know in interpreting the results
  • Glossary of important FX terms

Overseeing Credit Risks

  • Identifying and understanding credit risk exposure
  • Defining Credit losses
  • Corporate Credit versus Financial institution credit
  • Formation of an executive sub-committee
  • Structuring of the credit risk management apparatus
  • Structuring reporting: How losses and exposure can be communicated to the board and senior managers
  • Establishing an Credit Risk Management policy
  • Benchmarking practices
  • Gathering an understanding of the institution’s Credit risk profile
  • Tools for assessing Credit exposure
  • Client and customer ratings
  • Trade-credit ratings
  • Tools for credit monitoring
  • Establishing the monitoring function
  • Evaluating the monitoring function
  • Costly initiatives that must be considered
  • Data quality and database development
  • Information technology considerations
  • Personnel and human resource considerations
  • Credit model testing and stress testing: What executives and board members need to know in interpreting and using the results
  • Deciding how much in terms of resources to dedicate to credit risk management
  • Glossary of important credit terms

Overseeing Funding and Liquidity Risks

  • Identifying and understanding liquidity risk exposure
  • Defining liquidity-related losses
  • Formation of an executive sub-committee and collaboration with ALCO
  • Structuring of the liquidity risk management apparatus
  • Structuring reporting: How losses and exposure can be communicated to the board and senior managers
  • Establishing an Liquidity Risk Management policy
  • Benchmarking practices
  • Gathering an understanding of the institution’s Liquidity risk profile
  • Tools for assessing Liquidity risk exposure
  • Tools for liquidity risk monitoring
  • Glossary of important liquidity risk related terms

Day 3

Board Oversight of Hazard and Operational Risk

Overseeing Hazard/Operational Risk

  • Understanding operational risk importance
  • Operational risk exposures
  • Hazards and vulnerabilities
  • How items excluded from the operational risk definition affect executive decision-making
  • Formation of an executive operational risk committee
  • Creation of an operational risk policy and management manual
  • Additional terminology
  • Regulatory initiatives for financial institutions (Basel II, Standardised and Advanced Measurement Approaches)
  • Establishing an executive risk tolerance level for operational risk exposure
  • Gathering the tools for operational risk management
  • Data considerations
  • Personnel considerations
  • Information technology considerations
  • Governance considerations
  • Deciding what operational risk approaches to take
  • Deciding how much in terms of resources to dedicate to operational risk management

Board Oversight of Strategic Risk

Overseeing Strategic Risk

  • Identifying and understanding Strategic/Competitive risk exposure
  • Defining Strategic losses
  • Reconciliation with operational risks and other risks
  • Structuring of the strategic risk management apparatus
  • Structuring reporting: How losses and exposure can be communicated to the board and senior managers
  • Establishing an Strategic Risk Management policy (if necessary)
  • Benchmarking practices
  • Gathering an understanding of the institution’s Strategic risk profile
  • Tools for assessing Strategic risk exposure
  • Tools for monitoring and managing Strategic risk exposure

Course summary and close

Trust the experts

Maurice Ewing

Maurice is a global management consultant, former banking executive and experienced, public company board member that has worked in over 60 countries. He has been an advisor and consultant to boards and executive teams with numerous, major banks, investment banks, central banks and investment fun...

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