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About the course
Statutory regulation within the financial sector is a necessity. Consequently the banking industry is now confronted with a need to satisfy a huge number of compliance and regulatory reporting requirements.
This course is designed to achieve two primary objectives. Firstly, there is a knowledge requirement with respect to the financial risks within the banking sector that the regulators are addressing. Secondly, there is a much greater burden on banks to comply with the regulatory demands for more detailed and robust reporting of their financial condition and risk management practices.
This ground-breaking course provides a unique approach to realizing these objectives with a multi-disciplinary approach to regulatory risk reporting. Each module of the course will examine the main characteristics of each principal risk area, the key regulations which are in force and the applicable reporting requirements. Students will gain new, practical skills associated with the mechanics of risk reporting, and be able to apply them immediately.
GAIN A KNOWLEDGE OF:
- The main areas of financial risk that global regulators have focused on – making banking safer
- The design principles for developing internal controls and best practices within the risk management function
- The key compliance requirements, including the BaseIII standards, regarding mandatory reporting arising from the global oversight and regulation of the banking industry
- The techniques needed to examine the actual mechanics of regulatory risk reporting
GAIN THE SKILLS TO:
- Demonstrate competence in the task of complying with the requirements for regulatory risk reporting
- Articulate the inter-connected nature of the various regulatory requirements with respect to the overall financial condition of a bank
- Explain the rationale for the demands Of regulators for full compliance with reporting standards
Unit 1 - Introducing aims and objectives
- Understand the difference between risk and uncertainty – statistical nature of risk versus absence of probabilistic dimension to uncertainty
- Summarise the principal types of financial risk – market risk and capital adequacy, credit risk, liquidity risk, operational, legal and compliance risks, reputational risk
- Explain the methodological principles of Value-at-Risk (VaR)
Unit 2 - Counterparty and credit risk
- Examine facets of credit risk which hinge on losses sustained from failure of counter-parties to fulfil contractual obligations
- Distinguish the separate components of credit risk:
- Probability of default by counterparty – how reliably can it be estimated?
- Recovery rate – what percentage of the total obligation can be recovered after default?
Unit 3 - Market risk
- Understand the dynamics of underlying market volatility and market liquidity
- Understand the factors that drive pricing and risk of major asset classes
- Understand why the Basel Committee focused on FRTB to address shortcomings in the Basel 2.5 treatment of market risk
Unit 4 - Operational risk
- Illustrate how banks have substantial risks – resulting in financial loss, reputational damage and legal risks – from inadequate safeguards to avoid execution failures and misconduct
- Examine adverse consequences from operational failures in the banking sector
- Examine internal control procedures – front office/middle office/back office - and corporate governance provisions to minimise the damage from such failures
Unit 5 - Liquidity risk
- Examine the critical role of maturity transformation in managing liquidity risk
- Differentiating liquidity risk at the firm level and the systemic level
- Understand funding risks – over reliance on short term funding, concentration risk
Unit 6 - Stress testing
- Understand the vital importance of stress testing as cornerstone of risk management
- Understand the conceptual and theoretical underpinning of stress testing
Unit 7 - Derivatives
- Understand the key characteristics of derivatives and the underlying markets to which they refer
- Contrast with OTC instruments – swaps and structured products
- Overview of full variety of swaps and their value as hedging tools
Clive Corcoran has been engaged in the finance and asset management sectors, on both sides of the Atlantic, for more than 25 years. After completing his education in the UK, Canada and the US, he co-founded and became the CEO of an asset management company based in the USA during the 1980s and 90...
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