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Indian Institute of Management Bangalore

Risk Management for Banks and Financial Institutions

Jan 20—24, 2020
5 days
Bengaluru, India
INR 100000 ≈USD 1392
INR 20000 per day

How it works

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Description

The Financial Stability Report of Reserve Bank of India (June 2017) alerts the banks and the Nation about the crumbling asset quality of banks, erosion in bank profitability and scraping away of bank capital cushions indicating worsened stability of banking industry. The health of Indian banks have been deteriorating over the past few years. It also predicts further decline in asset quality and adverse impact on profitability by the year ending March 2018. With the lower Price to Book valuations of many banks shareholders shouldering substantial amount of risk of banks’ operations. One of the important aspects to be addressed to overcome this grave crisis is strengthening of risk management systems of banks.
The new risk based regulatory framework is further strengthening of regulatory mechanisms such as tighter definition of regulatory capital, higher risk-weighted requirements, a new minimum leverage ratio and a capital conservation buffer. The market risk framework has been largely overhauled, with improvements that include increased granularity and the introduction of the "expected shortfall" concept in the Standardised Approach, comprehensive risk capture and a more granular model approval process in the Internal Models Approach. Basel framework includes the Liquidity Coverage Ratio (LCR) and the Net Stable Funding Ratio (NSFR), standards aimed at ensuring banks' resilience to liquidity stress.

Banks and Financial Institutions are grappling with the challenge of proactively managing risks across markets. For each institution, the actual solution to this problem is entailing different philosophies towards risk policies, methodologies, processes and technologies. Visualizing the risk, combating the adverse effects on profitability through proactive planning and ensuring the implementation of the risk management process has currently assumes pivotal significance.

The new architecture of ‘Risk Management’ has two important tenets: risk quantification and establishing control systems. The Basel Accords (Basel-II and III) demands utmost importance for risk management systems in Banks and Financial Institutions and directs these institutions to adopt risk capital allocation on the basis of quantification of risk.

This programme is intended to cover all generic risks, i.e. Liquidity Risk, Credit Risk, Market Risk, and Operational Risk. The complex function of risk management demands application of sophisticated models for measuring and managing risks, and this programme aims at improving the competence of managers in selection and application of modern techniques of risk management.

Programme objective

  • To provide a comprehensive understanding on Basel-II, Basel-III and ICAAP, and its implications for risk management functions of Banks and Financial Institutions
  • To make the participants confident about conceptualising, quantifying, and managing Liquidity risk and enabling them to effectively use Asset-Liability Management (ALM) process and techniques
  • To enable the participants about the new/ revised framework of Interest Rate Risk in Banking Book (IRBB) and quantification of various forms of Interest Risk
  • To understand the alternate approaches of quantifying Market risk with VaR (Value at Risk) and other techniques
  • To provide sound understanding on credit risk models and architecting Internal Rating models, quantification of credit risk and dynamic provisioning approaches
  • To create awareness on alternate methodologies of quantifying operational risk

Programme Contents:

  • Performance analysis of Banks and Financial Service Institutions: Risk Management Perspective.
  • Liquidity Risk Management: Static and Dynamic Analysis, Maturity Gap Analysis, Liquidity coverage Ratios(LCRs)
  • New framework of Interest Rate Risk (IRR) Management: Sources, Quantification techniques and Management of IRR.
  • Value at Risk: Concept, Methodologies, and Applications.
  • Architecting Internal Rating Models for Credit Risk and improving the quality of Internal Rating Models.
  • Credit Risk Models: Multivariate techniques / Z-Score model, structured credit risk models, and other advanced credit risk models.
  • Securitization and Credit derivatives.
  • Operational Risk Management: A brief analysis of models.

Learning Outcomes

  • Understanding Basel-II and Basel-III framework and implications for Banks
  • Understanding Liquidity Risk Management (both static and dynamic)
  • Understanding Interest Rate Risk Management and other forms of Interest Rate Risk Management in Banking Book
  • Understanding Value at Risk.
  • Understanding Credit scoring and other Credit Risk Models.
  • Obtaining an overview on Operational Risk.

Methodology

This programme will be interactive and the learning methods will consist of Lectures, Numerical Exercises, Case Studies and Discussions with practical examples as well as Group project work.

Who should attend

Managers working in the domain functions of Credit, Investments, Corporate banking, Treasury and Risk Management, specifically handling Credit Risk, Market Risk, and Operational Risk in commercial banks/ newly established Small Finance Banks and Non-Banking Finance Companies and Financial Institutions.

This program is equally beneficial to senior executives of Information Technology (IT) and consulting companies dealing with risk management solutions to Banking and Financial Services (BFS) verticals. Executives working in Analytics companies may gain by exploring the new areas for application of analytics in banking and financial services sector.

Experts

Professor Jayadev’s area of interests are banking, financial markets and risk management. He has been actively associated in tracking the developments of risk management especially in banking context. Prior to joining IIMB, he was Associate Professor of Finance at the Indian Institute of Manageme...

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Next dates

Jan 20—24, 2020
5 days
Bengaluru, India
INR 100000 ≈USD 1392
INR 20000 per day

How it works

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