Measuring & Managing Operational Risk: Basel II Compliance

Analysis and reduction of operational risk in financial institutions has often taken a backseat, yet recent bank defaults and corporate scandals have shown the devastating effect poor operational risk management can bring. This three-day program enables delegates to identify and manage operational risk while complying with Basel II.

Participants leave the course with effective tools to develop effective internal control mechanisms and reduce and avoid enterprise-wide operational risk management.

11-Jun-2008 -- 13-Jun-2008New YorkUSD$3275
NY Institute of Finance - Midtown9:00am - 4:30pm Instructional Method:
Group-Live
Instructor(s): [ Mayra Rodríguez Valladares; ] Wed Thu Fri Level: Intermediate
CPE Credits: 21.5

20-Oct-2008 -- 22-Oct-2008New YorkUSD$3275
NY Institute of Finance - Midtown9:00am - 4:30pm Instructional Method:
Group-Live
Instructor(s): [ Mayra Rodríguez Valladares; ] Mon Tue Wed Level: Intermediate
CPE Credits: 21.5

Operations management staff, IT executives, Operational Risk Managers, Back-Office Managers, Settlement Officers, Internal Auditors, Risk Auditors
No advance preparation required.
Students will be able to:
  • Describe the developmental curve of the regulatory emphasis on enterprise-wide operational risk management at seven key points in time, from pre-1988 to March 2005, and locate the position of their company in the curve
  • Demonstrate a practical understanding of the core concepts involved in Basel II Advanced Measurement Methods for allocation of capital to operational risk, their respective advantages and limitations
  • Work out a core theoretical quantitative/qualitative mix of statistical and business process management methods for the management of operational risk at a banking institution
  • Define hands-on strategies and techniques for the definition, measurement, analysis, improvement, and control of operational risk within a banking organization
  • Apply the concepts and skills attained during the course to work in groups and frame solutions for real-life case studies involving operational risk
Introduction to Operational Risk or equivalent knowledge
"Teacher's knowledge and relevant experience"
"Expert resource person"
  • Credit Risk Analysis
    • DAY ONE - THE REGULATORY ENVIRONMENT

    The Basics

    • Abstract asset/liability/net equity structure of a bank's balance sheet
    • Risks affecting Asset/Liability Structure from moment to moment: strategic risk, credit risk, market risk, funding liquidity risk, market liquidity risk, operations risk, compliance risk, legal risk, reputational risk, systemic risk
    • Economic Capital vs. Regulatory Capital
    • RAROC vs. Safety & Soundness
    • Basel I
    • Minimum regulatory capital allocated to credit risk
    • Minimum regulatory capital allocated to market risk
    • Post-Basel I developments: regulatory capital arbitrage
    • Basel II
    • Pillar 1: Minimum regulatory capital requirements
    • Pillar 2: Supervisory review process
    • Pillar 3: Market discipline

    Advanced Measurement Approaches to Operational Risk

    • Operational Risk Management (Basel Committee on Banking Supervision-Sept. 1998)
    • Sound Practices for the Management and Supervision of Operational Risk (Basel Committee on Banking Supervision-Feb. 2003)
    • Key Aspects of the Advanced Measurement Approach (Federal Reserve Bank of New York-May 2003)
    • Implementing an Advanced Measurement Approach (Federal Reserve Bank of Boston-May 2005)

    DAY TWO - THE HANDS-ONS APPROACH

    Business Process Management

    • DEFINE
    • Problem solving tools
    • Process mapping
    • Check sheets
    • Pareto analysis
    • Cause and effect diagrams
    • Affinity diagrams
    • Tree diagrams
    • Process decision program charts
    • Matrix diagrams
    • Interrelationship digraphs
    • Prioritization matrices
    • MEASURE
    • Basic principles of measurement
    • Scales of measurement
    • Reliability and validity of data
    • Overview of statistical methods
    • Statistical analysis of cause and effect
    • Statistical process control
    • R&R studies for continuous data

    Business Process Management (Cont)

    • ANALYZE
    • Knowledge discovery
    • Tools
    • Getting the process baseline
    • Data warehousing- Data mining
    • IMPROVE
    • Basic scenario construction
    • Performance measures
    • Cost factors
    • PERT/CPM
    • CONTROL
    • Tools and techniques for control planning
    • Using statistical control processes for maintenance
    • Process control planning for short and small runs
    • Preparing a short run process control plan

    DAY THREE - PUTTING INTRODUCED SKILLS TO WORK

    • Group discussion of case studies
    • Data warehousing and data mining
    • Business Process Management
    • Flowcharting vs. UML (Uniform Model Language)
    • Regulatory Risk: Anti-Money Laundering
    • Wrap-up
    • Final review
    • Where to go from here?

    Clients who register for this course will receive a complimentary 6 month subscription to the Financial Times and FT.com. The Financial Times is the world's most respected financial newspaper providing a broad assessment on finance, business and the industrial sector. Subscriptions will start within 6-8 weeks of the application process, and are limited to one per client. For questions about your subscriptions call 800-628-8088 or email uscirculation@ft.com. US and Canada enrollees only.

    Lunch included for all students taking day classes.