The Mechanics of Risk Management - Delivered by Distance Learning

This timely course will provide you with a comprehensive overview of the different types of risk within global financial markets.

IFF is truly excited to open up this new frontier in risk management education and demand for places on this course has been phenomenal already. We are giving you the opportunity to preview the first module completely free of charge, giving you the chance to experience the quality of the course before signing up to complete the rest of the programme.

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Module 1: Introduction to Risk Management - identifying risk

Aims and Objectives

• Explain how the fundamental business of a bank involves generating differing risks
• Describe why managers and regulators increasingly focus on an institution’s survival rather than its ability to generate revenue
• Explain the way in which risk management objectives differ between an institution’s executives and the financial regulator.
• Explain the framework of risk management organisation within a typical financial institution
• Show how different businesses generate different risk factors within an organisation

Module 2: Introduction to Risk Management - Measurement and Management

Aims and Objectives

• Explain how uncertainty affects the boundaries of quantitative risk measurement, and why some commentators insist on a distinction between risk and uncertainty
• Show the benefits and shortfalls of volatility as a measure of risk
• Distinguish between value-at-risk measurements which give a snapshot of current exposures and stress tests which incorporate a 'what-if' potential narrative of a crisis
• Distinguish between local and institution-wide measurements of risk
• Outline the fundamental monitoring, governance and risk-culture issues which face an organisation

Module 3: Interest Rate Risk

Aims and Objectives

• Identify the key sources of interest-rate risk for a banking business in terms of both borrowing and lending
• Show how risks are generated as mismatches between assets and liabilities
• Understand the following key concepts;
  – Basis risk
  – Yield curve risk
  – Embedded optionality
• Show how 'Gap’ and duration measurements are used in analysing interest-rate risk
• Show how risks can be transformed and/or mitigated, particularly through the use of derivative instruments

Module 4: Credit Risk

Aims and Objectives

• Identify the key sources of, and variations in credit risk for a banking business in...
• 'Traditional' lending businesses whether retail or commercial
• Market transactions with other counterparties, such as derivative contracts, securities transactions, or repurchase arrangements
• Describe the fundamental elements of credit measurements
  – Probability of Default (PD)
  – Exposure at Default (EAD)
  – Recovery Rate (RR)
• Show how credit models are typically split into structural and reduced-form categories and explained the differences between them
• Explain how credit rating agencies operate
• Show how credit risks can be transformed and/or mitigated particularly through the use of...
  – Structural elements; covenants and collateral
  – Securitisation
  – Credit Derivatives

Module 5: Liquidity Risk

Aims and Objectives

• Explain what is meant by 'Liquidity risk' and how it should be distinguished from concerns over solvency
• Show how the business of an institution will generate liquidity issues
• Show how a 'spectrum of liquidity' distinguishes between the ability to raise funds through selling
  assets, and the ability to raise funds through increasing debt
• Explain how liquidity risks can be measured using 'gaps' and 'ladders', and how such measurements can be adjusted to incorporate future uncertainty
• Show how liquidity risk is typically managed in an institution, with particular attention to the principles laid down by the BCBS
• Show how regulators are increasing focus on liquidity risk particularly through measures such as the Net Stable Funding Ratio and the Liquidity Coverage Ratio

Module 6: Market Risk

Aims and Objectives

• Identify sources of market risk across an institution,both in terms of market businesses (e.g. equities, bonds, foreign exchange) and in terms of the institutional exposure to market factors (e.g. portfolio holdings or value of foreign subsidiaries)
• Outline the individual risk attributes of individual asset classes
• Explain how market risks are especially prone to correlation issues
• For a typical institution, describe how market risk management is organised, the key responses to exposures, and he regulatory context in which they operate. In particular we will focus on
  – Hedging both at desk (tactical) and institution (strategic) level
  – Rationing through limit structures and risk-adjusted pricing
  – Functional separation between front and middle/back office

Module 7: Operational Risk

Aims and Objectives

• Explain what is meant by ‘operational risk’ and show how it arises in a financial institution
• Give examples of how operational risk shortfalls in key areas have led to significant losses
• Explain how regulatory capital charges are calculated relative to operational risk for financial institutions
• Outline the major ways in which operational risk is measured, using metrics such as Key Risk Indicators (KRIs) and explain the difficulties inherent in such measurements
• Show how institutions seek to mitigate operational risk through internal organisation and control

Module 8: Risk Management and Regulation – “Big Brother is watching you”

Aims and Objectives

• Explain why authorities seem to believe that some financial institutions are 'Too Big to Fail' (TBTF
• Explain the key objectives of financial regulators
• Explain why capital adequacy in central to financial regulation and the development of a capital accords under the BCBS (Basel) framework
• Show how minimum measurements of capital adequacy are directly affected by risk in the following areas;
  – Credit Risk
  – Market Risk
  – Operational Risk
• Explain how Pillar II analyses aim to supplement these measurements
• Show how Basel III has increased basic capital requirements and is explicitly addressing the TBTF problem
• Show how regulatory developments have increasingly moved beyond capital adequacy to address key risk issues; examples are...
  – Explicit liquidity ratios
  – Overall leverage ratios
  – Changes to market structure (particularly derivatives) to increase transparency and mitigate counterparty credit risk
• Explain what is meant by 'shadow banking' and how it is (or is not) affected by regulation

Comprising of eight intensive modules delivered over 16 weeks, it will prove invaluable to all professionals in the markets looking to develop their theoretical and practical understanding of risk management.

The course has been structured to help non-risk professionals get to grips with the major concepts, themes and issues that underpin modern risk management. It’s a down-to-earth guide that de-bunks the concept that only an elite few can truly understand the dynamics of risk. It focuses on three key areas that permeate through all types of risk: Identification, Measurement & Management. It will provide you with a workable framework that will help you quickly understand the key issues within the different types of risk.

At the end of each module there is a practical assessment test that will allow you to benchmark your growth in knowledge and understanding and will also show you what a tangible ROI distance learning provides. The distance learning format allows you to study some of the more complex concepts at a pace that is right for you – we all have different learning styles and absorb information at different paces and these factors are optimised via distance learning. Reading lists, web links and case studies will also help reinforce your learning.