Operational Risk Management

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Operational Risk Management

The course covers in breadth and depth all aspects of operational risk management and its challenges in the financial services industry. Hot topics such as, selection and reporting of leading KRIs, demonstrating business value of risk management, regulatory compliance gaining and the formulation of a risk appetite statement are detailed and debated. Uprising topics like risk connectivity, reporting of aggregate measures and conduct risk monitoring are also covered.

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You will learn how to

·         All best practices in operational risk management for financial companies

·         Highlight of key regulatory expectations including Conduct risk

·         Effective tools to identifications risks and scenarios

·         Sound methodologies for scenario analysis and assessment of rare events

·         Structure method to identify and design leading key risks indicators

·         Root cause analysis for better control design

·         Typology and essential controls for human error

·         Formulate risk appetite and tolerance statements

·         Reporting on aggregate metrics

·         Risk connectivity and risk maps

·         Influencing risk culture

Course Outline


Operational Risk Framework and Maturity Level

  • Risk Management Framework
  • Three levels of Operational Risk Management: Strategic, Tactical, Dynamic
  • Risk Management: completeness vs. maturity
  • The ORM pyramid: which level are you at?

Governance and Implementation

  • Governance of Operational Risk
  • 1st line and 2d line: The partnership model
  • Make the risk committees effective
  • Business value of ORM
  • The invisible Framework

Risk Identification and Connectivity

  • Tools and techniques for risk identification
    – Exposures and Vulnerabilities
    – The Risk Wheel
    – Value drivers and reverse stress testing
  • Risk register: a list
  • Risk connectivity: network of risks
  • World economic forum: risk map

Risk Appetite Definition, Statement and Communication

  • Industry guidance on Risk Appetite
  • Definition and Governance: Communicating Risk Appetite
  • Risk Appetite & Tolerance Statements: examples and case studies
  • Template for actionable risk appetite
  • Cascading and Monitoring Risk Appetite: indicators and dashboards

Internal Controls: Human Error and Control Design

  • Slips and mistakes: Typology and causes of human errors (J. Reason)
  • HRA: Human Reliability Analysis and other methods
  • Understand and treat the causes of human error
  • Effective or Illusory controls
  • Prevention by Design

Risk and Control Self Assessments

  • Definition and rules for RCSAs
  • Tool: Impact / probability matrix: shapes and forms, definitions
  • Usage and choice when defining RCSAs
  • Risk rating: when and how

Root Causes Analysis – the Bow-Tie

  • Root cause analysis: tool and method
  • Benefits of root cause analysis: tracking the common failures and systematic patterns
  • Treating causes over symptoms
  • Bow-tie: a most effective tool to define
    – Preventive and corrective controls
    – Leading KRIs
    – Risk likelihood and expected impact

Designing and Selecting Preventive Key Risk Indicators

  • KRI, KPI, KCIs: concepts, overlaps and examples
  • Essential features of preventive KRIs
  • KRI Typology: four categories of preventive KRIs
  • KRI Design
  • Six steps for preventive KRIs: exercises
  • Examples of leading KRIs
  • Exercises: Define your own KRIs step by step

Regulatory Development: TSA, AMA and Conduct

  • Basle’s eleven principles for sound ORM: a benchmark
  • AMA under revision: current status
  • Conduct: definition and regulatory expectations
  • Monitoring conduct: case studies
  • Modelling conduct: latest research

Aggregate or Escalate: Risk Reporting

  • Modern issues on events and risk reporting: the regulator’s view
  • Analysing operational risk data: get insight
  • Risk reporting: find the angle
  • Management information: the “reporting cake”
  • Aggregate and escalate risk information: your options

Scenario Analysis and Planning

  • Steps and governance of scenario analysis
  • Tackling behavioural biases in scenario assessment
  • Assessing probabilities of rare events: fault trees
  • Acting on Scenario Analysis

Implementing the Desired Risk Culture: a Method

  • Defining Risk Culture
  • Acting on behaviors: the Influencer
  • Necessary conditions: willingness and ability
  • Risk Culture: DESIRE steps: Define – Inspire – Support – Enable – Reinforce – Evaluate
  • Assessing the risk culture
  • In The Classroom

  • Live, Online

  • Private Team Training

  • Indiviual Private Session

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