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IFF Training

The Mechanics of Operational Risk – Online

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Description

The function of operational risk within banks and financial institutions is going through a period of significant change. No longer seen as a back office function, the operational risk teams are an increasingly important component in modern risk management. The fallout from the financial crisis and resulting increased regulatory scrutiny combined with significant industry innovation and disruption from things such as FinTech, AI and cryptocurrencies means those working in operational risk need to constantly upgrade their skills and knowledge at a significant pace.

This course aims to provide a framework for operational risk best practice, demystify some of the complex issues impacting the industry and ensure that a robust body of knowledge is available to all operational risk professionals.

COURSE PROGRAMME

Unit 1 – Big Picture Overview

  • Distinguish operational risk from other kinds of financial risks
  • Understand the core concepts involved in risk governance
  • Recognise the adverse consequences, including reputational damage and penalties, that arise from operational failutes
  • Understanding the distinction between macro and micro level Key Risk Indicators (KRIs)
  • Understand how Value-at-Risk (VaR) can be applied to operational risk
  • Recognise how issues related to misconduct will impact the firm

Unit 2 – People and Conduct

  • Understand the importance of a code of conduct in corporate governance
  • Appreciate the need for a diversity of perspectives within human resources
  • Recognise the role of accountability within various episodes of misconduct - including the LIBOR rigging scandal
  • Understand the reasons that make possible unauthorised transactions (rogue trading) and what steps can be taken to curtail such possibilities

Unit 3 – Software and Model Risk

  • Understand the core concepts in the architecture of enterprise software, especially systems integration and security issues
  • Understand the key principles of cyber security
  • Understand the key elements in new software technologies including blockchain, artificial intelligence, and cloud computing
  • Understand the micro-structure of markets, their fragmentation and the nature of automated trading
  • Explain the risks associated with high frequency trading (HFT)

Unit 4 – Data Security and Business Processes

  • Identify the principal sources of cyber risk - internal and external
  • Understand the risks associated with introducing new business systems and how these need to be thoroughly tested before deployment
  • Analyse the risks associated with introducing new products and how these need to be thoroughl tested before deployment
  • Understand the nature of business process re-engineering (BPR)
  • Undertake diagnostics relating to possible operational loss scenarios

Unit 5 – Compliance and Regulatory Change

  • Describe the principal kinds of regulatory initiatives
  • Understand the focus on consumer protections in much regulatory policy in the financial sector
  • Recognise the growing focus amongst the regulatory community on macro-prudential tools of risk management
  • Articulate the key revisions to the regulatory framework for banking in the UK since 2007/8 financial crisis

Unit 6 – Quantification, Scenario Analysis and Mitigation

  • Understand the usefulness of a Pareto statistical distribution in calibrating extreme values
  • Recognise the limitations of internal loss data from previous operational mishaps
  • Understand the value of a strategic risk management philosophy and cultivation of an ethos of prudence and robust risk control
  • Understand the nature of power laws in financial modelling
  • Demonstrate competence in generating adverse scenarios for analysing how to control and mitigate operational losses

Unit 7 – Risk Culture and Governance

  • Identify the characteristics which give rise to a poor risk culture
  • Understand the dynamics of organisational change and how to impact the risk culture
  • Recognise that the risk governance philosophy should be fully integrated into all accounting, surveillance, IT systems and internal audit functions
  • Understand why "group think" can lead to poor risk governance

HOW YOU WILLLEARN

Through distance learning you can enjoy the benefits of studying, whilst minimising disruption to your existing professional commitments. You can set the pace at which you learn; applying the knowledge, skills and expertise gained from the materials to your work straight away. There’s also the huge savings of cost and time by not having to travel to a training location.

Approaching the topics in a modular format you can study the units online, save them to your computer or print them out. You can take advantage of the online forum to meet your fellow participants and share knowledge at any time. At the end of each unit there is a practical assessment enabling you to benchmark your knowledge and understanding and will also show you what a tangible ROI the course provides. Each unit is complimented by a video from the course director, taking you through the components of the course with particular emphasis on complex areas.

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