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Risk Appetite & Enterprise Risk Management Masterclass

Discuss strategic frameworks, understand key processes for implementing an effective ERM function and learn how to put in place the appropriate ERM architecture

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A one-day enterprise risk management course

Risk appetite training covers eight sessions over one day

Session 1: Risk Appetite

  • The key principles
  • Appetite, tolerance, and capacity – what do these thresholds mean?
  • A sample RAS
  • Defining RAS and risk limits
  • Using RAS as a management tool
  • Case study – Consider a simple RAS 

Session 2: ERM; Emergence, Scope & Purpose

  • Enterprise risk management training explores traditional Silo risk management
  • How does ERM differ?
  • Definition of risk - types
  • Consequences of failing to manage risk
  • Internal and external drivers of risk to organisations
  • The role of the risk management function
  • The purpose and key benefits of risk management
  • Corporate Governance and risk management
  • Case Study –Creating a new ERM 

Discussion – What do you think of your existing ERM? Or if none exists, your risk management process? 

Session 3: Challenges to Implementing and Establishing an ERM Program – Explained in Plain Terms

  • Defining risk, measurement, getting reliable data, confidence level, and time frame
  • Chosen measurement approaches, tracking error, duration, etc
  • Aggregation, distinguishing firm risks from client risks
  • Timescale challenges, amalgamating integrated VaR models
  • Risk variance and covariance
  • Hidden correlations
  • Complexity, collecting and transforming inputs from disparate sources
  • Adding narrative to data so key points can be understood/identified
  • Case Study - Hidden Correlations 

Exercise - Prepare a brief board paper setting out parameters followed by debriefing and discussion 

Session 4:  ERM – The Components

  • Definition of equity
  • The three types of equity; regulatory, economic and actual
  • VaR explained
  • Procyclicality
  • Assessing the risk maturity of the business
  • Setting parameters
  • Establishing report lines and responsibilities
  • Convincing decision-makers that the exercise is more than box-ticking
  • 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 debriefing and discussion.

Session 5:  Establishing ERM Systems

  • The key principles
  • Suggested framework, content, and layout
  • Prudence and conservatism
  • Period to be covered
  • .. how many risks?
  • The ERM process from preparation to Board approval
  • Challenge and independent review
  • Committees and their roles 

Session 6: Portfolio Risk Management & ERM Systems

  • This enterprise risk management course looks at portfolio performance measures
  • Value at risk (variance & covariance method)
  • Stress testing methodology & impacts of stress tests
  • Scenario modelling and its impacts
  • RAROC (Risk-adjusted return on capital)
  • Embedding ERM in the firm
  • Gaining acceptance
  • Case study – A sample stress test on the ERM 

Session 7: Risk Management Under ERM

  • Underwriting process
  • Transfer pricing
  • Active risk provisioning
  • Risk hedging strategies
  • Risk allocation
  • Case study – A simple risk allocation process 

Session 8: Accountability 

  • Risk control owners
  • Departmental responsibility
  • Transparent reporting
  • Visibility
  • Fairness
  • Sanctions
  • Case study - What report lines would you recommend for your department? How will exceptions be handled? Followed by a debrief and discussion 

Role Play – Persuade a colleague, who objects, to taking on this role. Followed by ERM training debriefing and discussion.

Enterprise risk management courses are delivered by a trainer who had a highly successful, long and varied “fast track” career at Lloyds Bank. This opportunity led him to a very senior management position in the bank’s private banking and wealth management division at an early age. He was then headhunted to join a merchant bank at the main board director level to head both the private bank and the group risk management function. He now has over 40 years of experience in managing risk in the UK banking and financial services sector.

Since retiring, he has been a freelance risk management training consultant and is currently an external Master Trainer at both HSBC and the Bank of China. Here, he has delivered major projects on a wide range of topics. At HSBC he helped design their global flagship Risk Management Programme for senior middle managers and delivered this globally for 6 years. He has created and delivered training, including enterprise risk management training courses, to a vast range of clients; from global giants to small firms and partnerships. He is an accomplished global trainer and has delivered extensive programmes in the UK, USA, South America, Europe, Africa, Asia and the Middle East.

ERM training will cover the following:
  • The concept of Risk Appetite and the starting point for all corporate risk oversight systems.
  • How ERM overcomes the challenges of “silo” working and enables risk stewards to manage risk on a firm-wide basis.
  • Appreciate what ERM means, what it does as well as its scope and purpose.
  • The challenges to implementing and establishing an ERM programme.
  • Redcliffe’s enterprise risk management training courses explore the cultural challenges, including getting the right sponsor, encouraging collaboration and understanding multiple risk types.
  • The components of the ERM.
  • The importance of exception and risk-based escalation.
  • How to establish ERM Systems.
  • An overview of portfolio risk management & ERM systems.
  • Understand risk management under ERM.
  • Optimising risk and equity allocation as part of ERM.
  • This ERM course will ensure you can get to grips with constant new challenges and ever-changing regulatory considerations.

  • Along with the technical lessons highlighted in this enterprise risk management course outline, Redcliffe Training has been a highly regarded and very successful training firm for more than 20 years. Enterprise risk management training courses are one of our core competencies.
  • We have been retained by the world’s largest trade finance bank to deliver risk management training to senior management continuously for almost 6 years.
  • Our course director is a highly experienced practitioner having spent over 40 years in the banking and financial services industry. He is not an academic and will share his hands-on experience and considerable on-the-job knowledge with delegates throughout this risk appetite course.
  • Our ERM course uses numerous real-life examples to illustrate the key learning points. This ensures the training has a direct impact and is not merely hypothetical.
  • We are always judged by our results and we are delighted to say that delegate feedback over the years for our ERM Courses has always been highly positive.

Why is enterprise risk management training a necessity? In very simple terms, ERM empowers the Chief Risk Officer (in smaller firms, often the Group MD or CEO) to measure, monitor and oversee all the risks the firm is taking. This is accomplished in the form of a single, user-friendly report that can be accessed from within a central “command bunker” in real time. Its purpose is to provide a meaningful risk oversight tool that 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 being managed most 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.

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 financial risk appetite statement (RAS) which is often called an Operating Plan.

This highly interactive risk appetite and enterprise risk management course will enable delegates to discuss strategic ERM frameworks, understand the key processes for implementing an effective ERM function and correctly put in place the appropriate ERM architecture. It 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. This risk appetite and enterprise risk management course will cover economic capital allocation, risk appetite in risk management, risk allocation, risk budgeting and risk reporting.

Who Should Attend?

Anyone with an interest in the topic seeking an update, new information or merely a refresher should attend this enterprise risk appetite training course.

Workshop Style & Delivery

Highly interactive and packed with case studies, opportunities to engage in discussion and if applicable, swap “war stories”.
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