Operational Risk

Course Outline

Seat Time: 2.5hrs 

This course will introduce the learner to operational risk in the business. The course will provide the learner with an overview of operational risk present in other financial institutions as well as how operational risk should be treated in the workplace. After completing this program, the learner will understand:

• Definition of operational risk.
• How risk is measured and identified.
• Basel II's recommendations on operational risk.

Course Topics

T1. Operational Risk Management: This topic will introduce the learner to the factor known as risk, the possibility of the loss of funds or resources in any situation, so that s/he understands how operational risk can best be managed.

T2. Recent Operational Risk: This topic will provide the learner with examples of recent operational risk failures that have occurred on an international scale so that s/he can recognize how such failures can affect a business.

T3. Organizational Structure: This topic will familiarize the learner with the structure of operational risk management throughout the institution so that s/he can describe the roles/responsibilities for those tasked with risk management.

T4. Identification and Measurement Tools: This topic will teach the learner about the various tools that s/he can use to identify and measure risk, such as the establishment of ôrisk appetite,ö and risk maps, so that s/he is best equipped to handle analyzing risk.

T5. Treatment of Risk: This topic will teach the learner about the ways that the financial institution treats operational risk and provides the learner with a discussion of the two measurable aspects of risk.

T6. Mitigation, Monitoring, and Control: This topic will introduce the learner to the concept of ôrisk mitigation,ö known as the degree to which the financial institution has either eliminated risk or taken action to reduce its impact, so that s/he can define risk mitigation and understand the mitigation process.

T7. Operational Data Reporting and Analysis: This topic will teach the learner about the importance of operational risk reporting, the contents of such risk reports, and analysis and prioritization of operational risk.

T8. Loss Data Capture: This topic will teach the learner about why tracking and capturing all internal loss event data is important to the institution as well as define ôoperational risk eventsö and the types of loss events.

T9. Basel II Approach for Operational Risk: This topic will teach the learner about the Basel Committee on Banking SupervisionÆs Basel II recommendations, which are more risk-sensitive and easier to fit to a financial institutionÆs particular needs.

T10. Capital Charge for Operational Risk: This topic will instruct the learner on the most important protective measures that Basel II establishes for financial institutions, the concept of a capital charge, so that s/he can describe related terms, such as Capital Adequacy Ratio (CAR) and the capital base.