Basel II Capital Accord - Operational Risk Charge (1.5 hr)

Objective:

To understand Basel II requirements for operational risk management and the approaches for capital allocation

      ◆Basel Capital Accord II
      ◆Capital allocation approaches suggested by Basel II
            ■Basic Indicator Approach
            ■Standardized Approach
            ■Advanced Measurement Approach
      ◆Issues and challenges in selecting these approaches

Best Practice Operational Risk Management Framework (1.5 hr)

Objective:

To understand the building blocks of a best practice framework to operational risk management

      ◆Components of a best practice operational risk management framework
      ◆Understanding each building block of the framework
            ■Operational risk strategy
            ■Organization structure for operational risk management
            ■Measuring and quantifying operational risk
            ■Infrastructure to support operational risk management

Case Study - How Leeson Broke Barings (45 min)

Objective:

To understand how poor operational risk management could arise and its impact on financial institutions

      ◆Events leading up to the collapse of Barings
      ◆Lessons learnt from the collapse of Barings
      ◆Impact of poor operational risk management

Operational Risk Management Methodology (75 min)

Objective:

To understand the methodology of identifying, quantifying and managing operational risk

      ◆Components of the operational risk management methodology
      ◆Operational risk assessment
      ◆Control evaluation
      ◆Operational risk mitigation
      ◆Operational risk monitoring

Control Standards (45 min)

Objective:

To understand how to develop a control framework to manage operational risks

      ◆International regulatory standards for internal controls
      ◆Control framework
      ◆Control evaluation

Q & A (30 min)