NUS RMI Enterprise Wide Risk Management Workshop

Program Overview

Since the global financial crisis hit the industry, the financial sector has entered a period of high uncertainty. Financial institutions are dealing with numerous risks of different nature: a fragile macroeconomic environment, substantial market volatility, geo-political instability, different operational risks such as fast growing cyber threats, financial frauds and conduct risks. All these challenges are a reminder to all financial institutions: in order to be able to effectively deal with this dynamic and complex risk environment, firms need to adopt an integrated enterprise-wide risk management approach that allows monitoring, assessing and controlling all these uncertainties and risks and provide robust risk mitigating actions.

This training course addresses this call and aims to provide a comprehensive coverage of key elements the enterprise-wide risk management that are vital for every financial organisation to develop and maintain a robust risk management protection in the fast changing modern world. It helps to understand a “big picture” of risk management processes and decision making.

Our two-day interactive, in-depth and highly hands-on course provides a practical knowledge of how to build enterprise-wide risk protection and holistically cover various risk types including credit, market, operational, business and other risks.

A unique element and distinctive feature of the course is a dynamic simulation game, a superb teaching vehicle. Course attendees will gain hands-on experience by going through “virtual” business situations. The dynamic simulation technique helps attendees to learn how to make right strategic risk management decisions to mitigate various risks. This simulation acts as a "Flight simulator" for course participants and allows them to better connect their knowledge with practical skills of making decisions in risk management.

Programme Highlights

• To provide an answer to a question that appears to be a central in the post global financial crisis period: What changes in the current risk management practice are needed to effectively manage risks in situation of high uncertainty?
•  To equip participants with practical knowledge of how to build the robust enterprise-wide risk management framework to protect your organisation from unexpected shocks and how to strike a right balance between the shock absorbency and shock prevention strategies.
• To provide a guidance on forecasting, stress testing and scenario analysis including the scenario development and selection, impact assessment and creating the stress mitigating actions.
• To offer a detailed practical guidance on integration of business strategy, risk appetite, risk measurement, risk monitoring and reporting, capital management in coherent system that ensures that all risks are timely and appropriately addressed and their impact once it occurs is successfully mitigated.
• To provide a detailed description of various solutions, methods and processes included in the risk management architecture that help efficiently identify, manage and mitigate the impact of risk shocks.

Learning objectives:

• Discover how various risks interplay, how unexpected risk shocks can unfold and why it is important to have 360 degree of risk assessment.
• Understand limitations of traditional risk management strategies, methods and tools to anticipate and proactively address shocks when the market uncertainty is high.
• Learn what is needed to deal with unmeasured unpredicted “unknown unknowns” and how to build the robust risk management framework which provides three lines of active defence against extreme shocks in situation of high uncertainty.
• Learn how to implement comprehensive enterprise-wide risk management and various solutions which successfully mitigate an impact of risk shocks.

Target Audience

The course is designed for a wide range of specialists from the financial service industry. Risk management professionals are natural target audience, but this course will also be suitable for people from the front office (relationship managers, traders, portfolio managers, hedge fund specialists), investors and business executives who need to better understand a nature of systemic and idiosyncratic risks and ways of its management and mitigation.

• Portfolio risk specialists
• Credit officers and credit controllers
• Rating and credit research analysts
• CRO
• Heads of risk and risk managers
  • Market
  • Credit
  • Liquidity
  • Operational risk
• Stress testing and risk appetite managers
• Actuarial specialists
• Managers of business strategy
• Equity and fixed income analysts
• Commodity traders and risk managers
• Debt capital market specialists
• Hedge fund managers
• Asset fund managers

Programme Schedule

Day One: Enterprise-wide risk management framework overview

Session 1 Why enterprise-wide risk management approach is vital

•  Big picture: main ingredients of enterprise-wide risk management approach
•  Understanding of different risk type interplay: credit, market, interest rate,operational, liquidity and business risks
•  “Normal” risk vs “Tail” risk, systemic risk vs idiosyncratic risk
•  Holistic enterprise-wide risk management framework and its key elements
•  Portfolio risk management approach and risk aggregation
•  Business strategy and the concept of 360-degree risk assessment

Session 2 Risk measurement, risk aggregation and modern risk analytics

• Importance of risk quantification for decision making process
• Boundaries for effective use of risk models and quantitative tools
• Advantages and limitations of quantitative risk models and tools
• Combining the risk analytics with management judgement
• Requirements for management information and risk systems
• Economic capital and VAR models
• RORWA vs RAROC
• Hedging strategies and tail risk
• “Black swan” prediction: traditional warning signals

Session 3 Risk Regulation and regulatory capital regime

• What new regulation is focussed on (Basel III, Solvency II, CRD IV)
• Balancing complexity and risk sensitivity
• New regulation as a game changer
• How new financial regulation shapes a competitive landscape in the financial sector
• Unintended consequences of new regulation
• Optimising risk and business strategy under new regulation
• Embedding regulatory requirements in the decision making process in risk management
• Setting right incentives for business
• Setting a comprehensive ICAAP

Day Two: Implementation of Enterprise-wide risk management

Session 4 Enterprise-wide risk management strategies and risk appetite

•  Basic risk strategies: shock absorbency and shock avoidance strategies
•  Natural limitations of basic strategies
•  Understanding the comfort zone and high risk zone concept
•  Integration of risk strategies
•  Strategic mistakes as a prime source of extreme risk for organisation
•  Analysis of business strategy and business model from risk perspective
•  Connecting business strategy and decision making in risk
•  Defining risk appetite: key areas and approaches
•  Risk Appetite framework and risk appetite statement
•  Understanding interlinks between risk strategy, risk appetite and business strategy

Session 5 Stress testing and dynamic stress simulation

•  Regulatory requirements and senior management expectations
•  Art and science of scenario creation and scenario selection
•  Forecasting methods and tools: advantages and limitations
•  Requirements for stress testing data and infrastructure
•  Efficient stress testing process and stress testing governance
•  Main weaknesses of traditional stress test methodologies
•  Transforming contemporary stress testing into dynamic stress simulation
•  Key stages of dynamic simulation approach
•  Modelling future scenarios and results aggregationt

Session 6 Early warning signal tools and crisis management

•  Distilling early warning signals from big data
•  Utilising unstructured date to inform signal tool
•  Building credible stress mitigating action plans
•  Connecting risk monitoring, stress testing and early warning signal tools
•  Building blocks of robust crisis management
•  Crisis governance and crisis MI
•  Recovery and resolution planning

Session 7 Risk governance and risk culture for enterprise-wide risk management

•  Ownership of risk in organisation and sharing risk management responsibilities in organisation
•  Potential conflict of interests in risk management and business functions
•  Optimisation of risk governance structure, controls and decision making process
•  Role of risk culture in shaping decision making and its key components
•  Transformation of risk culture in recent years
•  Role of regulators, risk management community, society in transforming the risk culture
•  Strengthening risk culture in order to enhance firm’s ability to weather the systemic and idiosyncratic shocks

Speaker

Dr Evgueni Ivantsov