Your ERM course director has spent more than 40 years in the banking and financial sector, much of it in a senior managerial/Director role. He is a former Institute of Banking Lecturer, having gained distinctions in the exams. He is a subject matter expert on all aspects of retail, corporate and global banking, including enterprise risk management and regulatory compliance.
He has lectured extensively to both leading global financial institutions and to smaller bespoke specialists. He has delivered extensive programmes in all parts of the world including the USA, Europe, MENA, Africa and Hong Kong. He is currently an accredited Master Trainer at the world’s biggest global bank.
In very simple terms, ERM empowers the Chief Risk Officer (often the Group MD or CEO) to measure, monitor and oversee all the risks the firm is taking in the form of a single, user friendly report that can be accessed from within a central “command bunker” in real-time. Its purpose it to provide a meaningful risk oversight tool which avoids the pitfalls of traditional “silo” working and “silo” risk taking. “Silo” working involves business units operating independently of each other and not always in the best interests of the firm as a whole.
Put bluntly, no CEO can attest properly that risk is managed effectively across the firm unless it can be measured, assessed and overseen in a single report that is available on a real time basis at the click of a button. Anything less involves guesswork.
Within any organisation there are both tactical and strategic risk takers. The strategic risk takers – CEO, directors and senior managers – formulate the business strategy and agree that certain risks can and must be taken, whereas others are to be expressly avoided. This strategy is communicated throughout the organisation using a risk appetite statement (RAS) which is often called an Operating Plan.
The RAS sets the “tone” of the business by setting out in clear terms how much risk the organisation is willing to accept in pursuit of its profit objectives. It also should be equally clear about risks that are unacceptable or should only be accepted in exceptional circumstances. Deployed well, the RAS becomes the blue-print or guide for the tactical risk takers to implement. Typically tactical risk takers comprise middle management, operational managers, client facing and risk support staff. It is these members of the firm that will be charged with making the initial risk assessment/decisions.
In an ideal world, acceptable risks are exploited, marginal risks are considered carefully and unacceptable risks are declined. Too much approval and losses will be made, too little and profitability will suffer. To enable top management to oversee the process of risk acceptance and above all to confirm it is working well, a robust system of checks and balances needs to be set in place. The firm needs to identify all the risks it is taking, to decide which to accept and reject and to apply an effective method of capturing, managing and monitoring risk across the whole firm. This is the role of enterprise risk management.
The concept of ERM is not new but became a priority following the 2008 financial crisis which revealed in very harsh terms that many organisations did not actually have a full appreciation of all the risks being taken across the firm. Instead risks were simply lumped together based on reports from individual business units. ERM requires an integrated risk management process that clearly measures all risks at all levels in all operating units and combines them into a single risk monitoring tool.
Case Study –Creating a new ERM
Discussion – What do you think of your existing ERM process
Case Study - Hidden correlations
Exercise - Prepare a brief board paper setting out parameters followed by debrief and discussion
Role Play – Dealing with objections from a senior colleague, followed by debrief and discussion
Case study –Calculating the three types of equity
Exercise – Consider your department. Are all risk components covered? What improvements would you suggest and what would you leave out. Followed by debrief and discussion.
Case study – Consider a simple RAS
Exercise –What RAS does your firm require? Followed by discussion and debrief
Case study – A sample stress test on the ERM
Case study – A simple risk allocation process
Case study – What are the exceptions you need for your department. Are they specific to you or the firm?
Role play – Dealing with a fictional exception in your department. Followed by discussion and debrief.
Case study – Looking from the shareholders viewpoint
Case study - What report lines would you recommend for your department. How will exceptions be handled? Followed by debrief and discussion
Role Play – Persuade a colleague who objects, to taking on this role. Followed by debrief and discussion
Case study– What must be done to ensure the new ERM reacts to real challenges and not just small changes? Followed by debrief and discussion
Exercise – who regulates you? What does each want from an ERM? Will we deliver this? Are we meeting these expectations with our ERM? What changes if any might be made?
This highly interactive and workshop style course will enable delegates to discuss strategic enterprise risk management (ERM) frameworks, understand the key processes for implementing an effective ERM function and how to put in place the appropriate ERM architecture.
The training course will deal with set up, implementation, operation, management and exceptional issues and will demonstrate how this important corporate governance tool can be used to manage the risk profile across the firm. It will cover economic capital allocation, risk appetite, risk allocation, and risk budgeting and risk reporting.
|Training Course||Training Course Summary|
|Retail Credit Risk Management||This is a two-day course to introduce and develop the ideas of retail credit risk and in particular credit scoring|
|Risk and Products of the Treasury Function||They will also obtain an understanding of the market players and their imperatives, a familiarity with the major product types and their uses and a level of comfort with financial terminology and jargon.|