School of Bank Risk Management

Description

Financial institutions have been managing their risks from inception. But the nature of risk management is fundamentally changing within these institutions. No longer is it seen purely as a control mechanism - but as a critical input into the basic business question: am I earning enough revenue out of this transaction to compensate me for the additional risks I am taking? This concept permeates all the leading financial institutions.

Every transaction, product and service needs to be assessed in terms of the increase in risk to the institution, with the assurance that the pricing of that transaction will generate a suitable return. Budgets should be allocated, and performances measured, on the basis of revenue earned per unit of risk generated. Such a risk culture is reinforced by the Basel Accord.

This requires the banks to allocate regulatory capital against the major components of risk, using either regulatory or, more likely, internal models. In the recent Western banking crisis and subsequent economic downturn, many financial institutions lost large amounts of money and had to be assisted by governments. Was this a failure of risk management, and if so, why? This course will discuss what happened, and how some institutions actually came out of the credit crisis with enhanced reputations. This course is designed to provide delegates firstly with a high-level overview of modern risk management, including a breakdown of the new regulations, and how banks are managing compliance with these. This is then followed by an in­depth examination of the techniques and management structures used to measure and control risk, including a detailed discussion on measuring risk across all the major classes: market, credit and operational.