Basel & Risk Management Basel III in detail and a glimpse at Basel IV This course can be presented in-house for you on a date of your choosing The Banking and Corporate Finance Training Specialist
Course Overview Most major banks are now compliant with the capital requirements of Base IIII and are preparing some better than others for the full impact of the imminent liquidity, leverage and long term funding source provisions. What next? What will be the continuing impact of these changes on the capital requirements and, more broadly, on the future business strategy of the bank? Did Risk Management have a good crisis? Many banks find their regulators are refusing to allow them to model credit risk at an advanced level. Course Overview Some institutions are re-organising and empowering risk management as a result of the crisis. Enterprise-wide risk management has been a phrase talked about for at least twenty years; banks have started to take the concept much more seriously why? How does risk management evolve beyond the Accord? Are modelling systems up to the challenge? What about Stress Testing? This course provides abroad examination of risk management for professional bankers. It considers the Basel Accords, ERM, the creation of a risk framework and how risks management should be organised. Risk is assessed using both modern and traditional techniques and all major risk categories are examined in detail. Who Should Attend Risk Managers, Internal Auditors, Compliance Officers, External Auditors, Consultants and suppliers and all financial personnel involved with the risk and compliance function. Knowledge Pre-Requisites Some knowledge of financial services and regulatory regimes would be helpful. Course Content Day One Session 1: Introduction Basel and its evolution Vickers GSIFI s IASB proposals Session 2: The Basel II/III agreements Improving risk & asset management Aligning regulation and economic realities The technical challenges from a bank/regulators point of view How much capital is sufficient capital The 3 pillar regulatory structure Session 3: Basel III in more depth An overview of the new requirements The new minimum capital requirement Model Generated DDF & CCF Capital conservation buffer Countercyclical buffer
Counterparty credit risk Liquidity risk management LCR and NSFR Timeline and transitional arrangements Leverage Ratio Session 4: How will Basel III impact on Banks Higher capital means lower gearing More liquidity means lower earnings A move towards fee income ( Non funds based income ) Private Banking & Trade Finance at forefront Charges for retail banking and money transmission services increasing Pressure on margins Conservation of capital essential Session 5: How will Basel III impact clients Higher charges Higher fees Clients which offer banks larger share of wallet more desirable Multi banked relationships will get tougher Increased client segmentation with real CRM for a select few Automation and dilution of branch as central focus Remote banking via internet and mobiles strong priorities Credit allocation much stricter and probably harder to get. Session 6: Enterprise Risk Management What is risk management? What is ERM and its challenges Types of risk How do risks vary? Risk registers and definitions Risk appetite (personal and corporate) Key measures of risk (including VAR) The responsibilities of the risk management function Regulatory and economic capital Insurance and risk management Session 7: Basel & Market Risk Banking book v Trading book The different constituents of market risk Implementing controls, limits and thresholds Reporting excesses and authorised deviations Dealing with derivative instruments Forwards Futures Options Swaps
Value at risk calculations Controls in a trading environment Trading book reports The Basel requirements The changing rules Stress testing market risk Session 8: Basel & Liquidity Risk The management of liquidity risk GAP analysis The key elements of uncertainty The real liquidity of asset types Limits, thresholds and uncertainty Basel and liquidity risk Reserve lines Stress testing Session 9: Basel & Credit Risk The Basel approaches to credit risk The standardised approach The risk management of credit risk The role of the credit committee The use of rating agencies Default risk using historic information Corporate credit assessment Company risk assessment Basel & model risk Stress testing Session 10: Basel & Operational Risk What is operational risk? Basel and operational risk Basic indicator Standardised approach AMA The business analysis The identification of operational risk The key parts of operational risk Developing an operational loss database The requirements of the Advanced Measurement Approach Control and risk self-assessment Developing key risk indicators Using external loss data
Session 12: Risk Based Economic Capital and Capital Management Economic capital and profit A modern capital management framework Components of capital management Classes of capital Tiers 1, 2 & Hybrids Composition of available (book) capital under Basel II & III Regulatory vs. economic capital Session 13: Internal Capital Adequacy Assessment Process (ICAAP) What is it Puropse Framework and typical content Sample capital position Sample regulatory & economic capital ICAAP Hot Buttons and regulatory feedback Session 14: Risk Adjusted Performance Measurement (RAPM) Optimising the management of financial resources Economic Profit and Economic Value Added (EVA) Return on Capital RAROC, RORAC and RARORAC Reconciling financial (IFRS) results with risk adjusted results The challenges of enterprise-wide implementation Session 15: Other Key Risks Financial Crime Compliance Regulatory Compliance Types of risk Strategic risk Reputational risk Session 16: Basel IV What Changes are Likely Senior Manager Responsibility Bond Bail In Ring Fencing Liquidity Capital Gearing Market risk Hybrids Session 17: Course Wrap Up and Open Forum END http://redcliffetraining.com enquiries@redcliffetraining.co.uk +44 (0)20 7387 4484