Operational Risk Management - Online

This course introduces the concept of Operational Risk and discusses events that trigger losses in firms due to operational loss events. It covers the Basel Committee on Banking Supervision's Working Paper on the Regulatory Treatment of Operational Risk and highlights various changes in the banking sector that have created operational risk scenarios. The course introduces operational risk aspects in insurance and emphasizes the need to have a well defined scope and process for identification of risk factors in operational risk management. Various methods of estimating potential loss data are illustrated. Forecasting models used in estimating the potential risk factors are described and the course deals with risk analysis as a part of operational risk management.

This course explains how loss prevention is more effective than loss reduction, examines various loss control measures and elaborates on the methods used in loss reduction and how risk avoidance is used as a risk mitigation method. The basics of risk financing and its advantages and disadvantages are presented and insight is given into how a framework enables the management to identify and classify risks and take appropriate action.

This is an online self study course that can be globally accessed from any internet enabled computer.

Available TodayOnlineUSD$250
Instructional Method:
Self-Study
Level: Intermediate
CPE Credits: 42

Operations management staff, IT executives, Operational Risk Managers, Back-Office Managers, Settlement Officers, Internal Auditors, Risk Auditors
  • Value at Risk - Online
  • Risk Management Using Derivatives - Online
    • Introduction to Operational Risk
    • Significance of operational risk
    • Operational risk management programs
    • Addressing operational risk
    • Measuring and modeling operational risk

    Basic concepts

    • Loss events
    • Risk factors, loss types and event/ factor controllability
    • Dependencies between risk factors and events
    • Attribution of loss

    Regulatory treatment of Operational Risk under Basel II

    • Rationale for an operational risk charge
    • Basic indicator approach
    • Standardized approach
    • Advanced measurement approach
    • Analysis of quantitative impact survey result
    • Role of Pillars 2 and 3

    Operational risk in various banking sectors

    • Spectrum of risks in banking sector
    • Risk synergy in the context of retail banks
    • Structural risk management
    • Accounting policies, costing and pricing models
    • Operational risk in private banking sector

    Operational risk in insurance

    • Risks exclusive to insurance
    • Regulatory issues and its impact
    • Alternative risk transfer and finite risk
    • Captive insurance companies

    Developing objectives and identifying risks

    • Risk management agenda and targets
    • Risk management organization and policies
    • Benchmarking internal processes and resources
    • Identifying process and resource risks
    • Identifying risk factors
    • Identifying and categorizing loss events

    Estimating potential losses - Data

    • General measurement techniques
    • Historical analysis
    • Subjective risk assessment

    Estimating potential losses - Loss distributions

    • Probability distributions
    • Building a distribution
    • Estimating risk factors
    • Choosing an event distribution
    • Operational Risk database

    Analyzing risks

    • Risks aggregation
    • Monte Carlo loss simulation
    • Risk management alternatives
    • Analyzing loss events
    • Analyzing risky processes and resources
    • Analyzing risk factors

    Loss prediction and prevention

    • Loss prediction
    • Loss prevention
    • Process reengineering and work restructuring
    • Product redesign and automation
    • Human factors engineering
    • ERP and reliability maintenance

    Loss control

    • Diagnostic controls and Inventory management
    • Redundant systems and boundary systems
    • Computer security and physical security management
    • Internal and external audit

    Loss reduction and risk avoidance

    • Legal risk reduction and loss isolation
    • Contingency planning
    • Redundant systems and boundary systems
    • Crisis management
    • Risk avoidance
    • Quality management phases
    • Organizational design, culture and relationship management

    Risk financing

    • Financial restructuring
    • Asset-Liability Management
    • Corporate diversification
    • Insurance
    • Self-Insurance
    • Hedging using derivatives
    • Contractual risk transfer

    Measurement framework

    • ORM cycle
    • Framework criteria and assumptions
    • Current framework approaches
    • Measurement process for ORM
    • Delta and EVT methodologies

    ORM in practice

    • Learning and response loops
    • Guidelines for effective reporting
    • Event reports and Operational profiles
    • Risk reports
    • Evaluating and updating the risk model
    • Implementing bank-wide ORM

    		Enterprise - wide Risk Management (ERM)
    • Enterprise-wide risk information systems
    • Challenges to ERM
    • Project Management for an ERM system

    Basic and causal models

    • Top-down risk models
    • Bottom-up risk models
    • Selecting a risk model
    • Causal models

    Legal risk and taxation rules

    • Issues in contract enforcement
    • Board of directors and shareholder activism
    • Management responsibility for legal risk
    • Transparency

    E-banking

    • Security risks in e-banking operations
    • Systems design, implementation, and maintenance flaws
    • Customer misuse of products and service

    Systems and software

    • Operational risk software
    • Some of the software in the market

    Case study- Barings

    • Overview of the case
    • How the massive losses were incurred
    • Lessons to be drawn from the incident

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