Operational Risk - Beyond Regulatory Constraints
In financial institution, operational risk has been considered as minor compared to credit risk and market risk. Moreover, Operational Risk is too difficult to grasp for bankers. Therefore operational risk management is often considered as a regulatory constraint or as an imprecise practice rather than a science, and it is often hijacked by political necessities, or can turn into insignificant exercises aimed at predicting small losses or improving efficiency without consideration for high-impact risks.
Why should you Attend: Most large losses have been due to the occurrence of operational risks. Whilst financial institutions think they know about this type of risks, the profession has been slow to learn from other older industries dealing with catastrophic risk on a daily basis.
The banking world has not been able to avoid large debacles due to e.g. rogue trading and macroeconomic turbulences. It is now critical for banks to set up comprehensive frameworks to handle these risks at reasonable costs and to the satisfaction of regulators, without compromising everybody’s drive to go forward and advance in sophistication. Banks now have to find out, formalize and implement techniques to identify, understand, measure and proactively handle operational risks. Methods for that can vary, but one has to find the best methods, as the price of failure and the rewards for success are too high: straight loss, regulatory effects, reputational loss etc. can no longer be neglected.
Areas Covered in the Session:
- Operational risk frameworks
- Minimum capital requirements for operational risk
- The Basel II and III Accords
- Internal and external compliance
- Effective approaches to risk-based economic capital management
- Measuring Risk-Adjusted Return On Capital (Raroc)
- Relationship with other risks
- Understanding risk tolerance
- Impact of Basel III regulation on financial organizations
Who Will Benefit:
- Operational risk analysts
- Operational risk managers
- Operations managers
- Back-office
- Middle-office
- Risk functions
Fred often offers training and workshops, and also works as a senior consultant for numerous banks to help handle risk management and their regulations, be it on the regulatory side of capital management, or towards the aspect of systems and internal controls, or risk management just because it makes sense to manage risk. Among his assignments, Fred has been, as appointee of European Union, participating in the starting up of an operational risk function in a large Egyptian bank. His academic background includes an MBA from London Business School, Economics from West-Berlin University and a business degree from a Paris business school. Fred, as a certified member (PRM) of PRMIA, has been participating in PRMIA Education Committee.