Workshop Overview
This is an intensive course on Operational Risk Management & Mitigation
– from assessing the operational risks to how to implementing a working,
viable operational risk management program. Aimed at the financial
services industry this course explores the Operational Risk management
function and mitigation requirements as mandated in the Basel Accords.
A key objective of this course is to move the participants beyond the
operational risk compliance requirements set down in the Basel Accords
to an understanding of managing operational risk as a value-added
proposition that can be instrumental in increasing the profitability of the
bank while at the same time improving its structural strength.
Now the ongoing continuum of headline-grabbing operational risk
incidents at banks, other financial institutions and even regulators
continue to keep the issue of operational risk management at the top of
agendas of CEO’s, CRO’s, Risk Managers and Internal & External Auditors
alike.
These incidents are wide ranging and flow from issues like bank ATM
collapses, bank operating system failures, regulatory settlements (fines) in
the ongoing US sub-prime mortgage saga, rogue traders and the related
risk managers who either missed or were willfully blind to all the warning
signs.
As the size and complexity of financial institutions has increased, so too
have the challenges of understanding and reducing operational risks
down to truly manageable levels. Increased regulatory concern and
scrutiny have also increased the cost of operational risk events in the
shape of outright financial loss, regulatory fines and declining customer
confidence.
Operational Risk Management (ORM) is an effective tool for not only
maintaining but increasing, bank profits, shareholder value, public
perceptions and goodwill.
Executed properly, improvements in ORM can lead to substantial
financial, reputational and regulatory benefits – all this adds up to
increased profitability, greater financial stability and improved customer
satisfaction – in short, a better safer bank/ financial institution.
But, to achieve these gains, financial institutions must apply a consistent
and comprehensive approach to managing their operational risks. They
must also understand that this approach is fundamentally different from
the approaches that they use in managing market, credit and liquidity
risks.
“Bad" Operational Risk Management has a severely negative effect on
financial institutions in four very clear ways:
1. Actual operational risk losses are a direct hit to the income statement.
Equally the massive fines being paid have the same effect.
2. The market punishes companies, via the stock price, for operational risk
failures. This loss of value could well exceed the actual financial loss
experience by the risk event in the first place.
3. Lowered Credit Ratings, which raises the institutions cost of borrowing
money in the marketplace.
4. Operational risk failures can vastly increase the cost of compliance by
raising the level of regulatory scrutiny and complexity not to mention
substantial penalties.
All too often banks have seen the need to effectively manage their
operational risks as simply an issue of complying with what the bank
regulator requires, in this case the operational risk requirements of the
Basel Accords, rather than a disciplined process in its own right, that
serves to not only ensure a banks survival but which can, in the long run,
contribute to that bank’s financial fortune.
Implementing an effective Operational Risk Management routine (“Good”
Operational Risk Management) is a complex process. At its core is an
understanding of what Operational Risk is and how it can be managed.
This course is an intensive introduction to Operational Risk Management
and Mitigation. It is designed to provide a practical “hands-on” approach
to participants which will furnish them with all the tools and techniques
they need to begin implementing what they have learned almost as soon
as they return to the office.
The underlying course philosophy is to move the participants beyond the
largely theoretical international compliance requirements for operational
risk (specifically those contained in the Basel Accords), and into an
understanding of the practice of operational risk management and an
ability to actually implement these procedures