Formation/Cours

In recent years, several notable events, combined with an additional scrutiny from regulators and financial intermediaries have forced financial institutions to recognise the importance of operational risk.

As a consequence, the banking industry first, followed closely by the insurance undertakings, has been undergoing a surge of innovation and development in several areas to develop sound operational risk management practices and systems.

The management of operational risks concentrates on the proactive prevention of frauds or business disruption of financial institutions that cover four areas: employees, process, systems, and external attacks. Therefore, the needed skill set is rather broad and mixes as well traditional internal control/audit methods as very sophisticated quantitative risk management techniques.

Financial institutions also continue to face conceptual challenges, such as, what is operational risks and what is its scope? Should financial institutions be concerned with operational risks? If so, how should they be assessed and intelligently integrated with other risks? What are the best practices for the measurement and management of operational risks? In this course, we will provide the first discussion and an up-to-date treatment of all these issues.

At the end of the course, the student should be able to:
At the end of this course, you should be able to:
• Have a view on main principles of risk management
• Understand the nature of operational risk and how it relates to other risks (credit, market, liquidity, business risks)
• Grasp the main concepts related to Operational Risk and specifically the notions of causes, events and impacts
• Explain the Operational Risk management process and its main components
• Understand the importance of support and control functions in mitigating Operational Risks
• Have a view on Enterprise Risk Management

1. Introduction
1.1 Famous operational risk cases
1.2 The rationale for regulation, corporate governance and responsibilities of management –
monitoring, auditing, internal control, fraud prevention, and shareholder value improvement

2. Risk Definitions and Categories
2.1 General principles and concepts of risk management
2.2 What is operational risk?
2.3 Basel II / Solvency II guidelines on operational risk – Pillars and Approaches
2.4 ISO31000 Standards on Risk Management

3. Identifying operational risk
3.1 Dimensions of Operational Risk (People, Process, Systems, External)
3.2 ?Risk Register & Losses Collection
3.3 Operational Risk Self Assessment
3.4 Process Mapping

4. Measuring and calculating operational risk
4.1 Regulatory and Economic Capital
4.2 ?Calculating Operational Risk Capital
4.3 Advanced Measurement Approach
4.3.1 Loss Distribution Approach
4.3.2? Qualitative Methods – Scorecards and Scenario Analysis

5. Mitigating, Monitoring and Controlling operational risk
5.1 Risk Mitigation Strategies
5.1.1 Business Continuity and Planning
5.1.2 Insurance
5.1.3 Outsourcing
5.2 ?Monitoring, Reviewing and Controlling Risks
5.3 ?Key Risk Indicators
5.4 ?Creating a “Risk Culture”

6. A primer on Entreprise risk management
6.1 ERM Frameworks
6.2 ERM Process

7. Critiques and possible evolutions