Operational Risk

Day 1

Operational Risk Classifications
 Risk impacts and likelihood – Four ‘C’s chart
 General outline and taxonomy

Operational Risk management
 Categories
 Identification techniques

Short exercise - Recent risk events classifications

Risk mitigation alternatives

Mid morning break

Transferring risk – outsourcing, insurance

Link with liquidity risk, market risk and credit risk

Short exercise to categorise and list cause, effects and potential mitigating actions of a list of risk events

Lunch

Managing Operational risk proactively
 Controls
 Capital incentives

Introduction to the case study
 Case study (Soc Gen rogue trading) in part 1 – People
 Review of case study part 1

Mid afternoon break

Governance
 Policy
 Appetite

Three lines of defence
 Line movement
 Operational Risk
 Audit and the role of other control functions

People risks
 Culture
 Fraud
 Accountabilities and responsibilities

Reputational risk

Day 2

The risk management and control process
 The operational risk and control cycle
 Operational risk management evolution steps

Case study (Soc Gen) in part 2
 Process
 Review of case study part 2

Applying process risk management to reduce regulatory fine risk
 Transaction reporting
 Client Assets
 Client Due diligence and Anti Money Laundering

Mid morning break

Risk events and loss data
 Regulatory view and capital
 Basle 2
• Three pillars
• Three measurement approaches
• Short group exercise to calculate some risk measures

Basle 2 and capital
 Quantifying Operational risk
 Major operational risk events
 Basle 3

Lunch

Systems risks

Case study (Soc Gen) in parts 3
 Systems
 Review of case study part 3

Mid afternoon break

External events
 DR and BCP
 People
 Process
 Systems
 External Communications
 Preparation

Exercise - Desk top drill

Day 3

Establishing an Ops Risk & Control framework
 Roles and responsibilities
 Incident management
 Risk mitigation tools

Exercise – writing an incident report

Mid morning break

Identifying risk and exposure

Exercise - Defining Risk Appetite

MI and Key Risk Indicators
 KRIs and KCIs
 Incident and loss data management
 Reporting
 Systems

Exercise – preparing an Operational risk dashboard report

Lunch

Risk and Control Self assessments

Group exercise - Prepare risk and control self assessment

Scenario analysis and stress tests

Group Scenario analysis exercise

Each group assesses the same scenario with different risks types and assumptions then compare results

Mid afternoon break

Regulator visit senior manager prep
 Using the course material the groups prepare a senior manager presentation to prepare their company prior to a regulator visit to review Operational Risk