Operational Risk for Financial Institutions - Beyond Regulatory Constraints
Most large losses have been due, at least partly, to the occurrence of operational risks. Whilst financial institutions like to show that they know about this type of risks, the profession has been slow to learn from other older industries for which risk management is a critical factor.
The banking world has been subject to avoid large debacles due to e.g. rogue trading and unharnessed macroeconomic turbulences. It is now critical for banks to set up robust but flexible comprehensive frameworks to handle these risks at reasonable costs and to the satisfaction of stakeholders, without compromising any legitimate drive to go forward and advance in sophistication. After the turbulent start of operational risk management, banks now have to find out, formalize and implement techniques to identify, understand, measure and proactively handle operational risks. Methods for that can vary from one institution to another, but the price of failure to find the most appropriate methods and the rewards for success are both too high: straight loss, regulatory effects, reputational loss etc. can no longer be neglected. We review here a few new techniques for handling operational risk.
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
- Handling risks
- Impact of Basel III regulation on financial organizations
Learning objectives: Help participants to understand and deal with operational risk in their institution or department, equip people to interact with operational risk departments.
Who Will Benefit:
- Financial Institutions
- Operation Risk Management people
- General Management, Administration
- Front Office, Line Management
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.