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FINANCIAL MARKET COURSES

Operational Risk - Identification & Measurement

When people think of banking as a risky business, they are generally concerned with fundamental financial exposures such as credit or interest rate risk. However, the risks faced by banks today stretch well beyond these traditional banking exposures. Technological innovation, growing complexity, and ever-bigger transactions have increased the potential for losses due to ‘non-financial’ causes. Modern-day institutions must deal with the full gamut of risk, from trade processing errors to rogue traders, technology failures to terrorist attacks. These non-financial types of risk are generally classified under the umbrella term 'operational risk'.

 

The identification, measurement, and management of operational risk is thus a real issue for banks today. But what exactly is operational risk, and how should a bank deal with it? This course addresses several aspects of these issues in detail.

  • OBJECTIVES

    On completion of this course, you will be able to:

    Identify the typical sources of operational risk for a financial institution

    Describe the various approaches to assessing or measuring operational risk

  • COURSE OUTLINE

    Topic 1: Identifying Operational Risk

    What is Operational Risk?

    o Basel Definition

    o Operational Risk vs Operations Risk

    OpRisk Events

    o Internal Fraud

    o External Fraud

    o Employment Practices and Workplace Safety

    o Clients, Products, and Business Practices

    o Damage to Physical Assets

    o Business, Disruption and System Failures

    o Execution, Delivery, and Process Management

    Legal Risk

    o Definition

    o Sources

    o Losses

    Topic 2: Measuring Operational Risk

    Measure or Assess?

    Regulatory Capital

    o BIA, TSA, AMA

    Measuring OpRisk

    o Loss Distribution Approach (LDA)

    o Scenario-Based Approach (SBA)

    o Risk Control Self- Assessment (RCSA)

    o Key Risk Indicators (KRIs)

  • PREREQUISITE KNOWLEDGE

  • ESTIMATED COMPLETED TIME

    75 Minutes

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