Day One
Session 1: Operational Risk Scope and Framework
First session to discuss the scope of the operational risk function, the framework used in the company to manage risks, what has been achieved and what is left to be done.
Discussions over a maturity model to specify where the company is and what are the objectives ahead in terms of risk management.
Scope of Operational Risk
Losses, near misses, impacts
Benchmark of operational losses to gross income
Attributes of effective risk management
Examples of Operational Risk Frameworks in Banking and Insurance
The ORM pyramid: which level are you at?
Group discussion and sharing of experience around a maturity model of ORM
Session 2: Regulation and Governance of the Risk Function
Regulatory context and regulatory expecations regarding operational risk is there to give a context.
More importantly, the session highlights the do’s and don’ts for managing the relationship with the business and running a value-adding risk function. Based on personal experience and real case studies.
Basel II and III for operational risk: regulatory expectations
Revisions of the Standardized approach
Governance: Three lines of defence
The Invisible Framework
1st line and 2d line of defense: a partnership model (Bupa Global)
Risk management to create value
Case studies
Session 3: Risk Identification: tools and techniques
A hands-on, practical session giving tools and techniques to risk managers to run effective risk identification workshops with the business.
Risk identification workshops are sometimes neglected, moving straight to risk assessement. The session corrects this damaging short-cut.
Tools and techniques for risk identification: how to run a risk identification workshop with the business
Risk identification using a business language
Exposures and Vulnerabilities
The Risk Wheel
Value Drivers
Reverse stress testing
Risk register and connections between risks
Group work: identify top risks and class feedback, share practices and challenges
Session 4: Effective Risk and Control Self Assessments / ORSA
RCSA in Banking, ORSA in Insurance, they constitute an essential buidling block of the operational risk framework.
Simple in apparence, succesful execution of risk assesment workshop requires method and a common understanding by all parties to produce comparable, useful results.
This session, based on more than a decade in running risk assessments workshops, teaches the essential requirements to risk professionals.
RCSA, ORSA (Operational Risk Self Assessment)
Definition and rules for ORSAs
Impact / probability matrix, ratings, colours and risk appetite
Methodollogical choices and governance
Definitions and comparability
Running a workshop
Class exercise: running a RCSA
Day Two
Session 1: Preventive Key Risk Indicators
Key Risk indicators are my biggest area of expertise, both in training and consulting.
This session gives an overview of the essential features of preventive KRIs to avoir confusion with a tally of events. It focuses the reflection on the understanding of what causes operational risk events, to improve the preventative nature of KRIs.
Essential features of preventive KRIs
KPI, KRI, KCI? concepts and examples per activity
KRI must address risks, not events: know your risk drivers
Typology of KRIs: Environmental, Stress, Causal and Failure
KRI Design: Frequency - Trigger levels - Escalation criteria – Ownership - Data accuracy
KRI reporting and risk reporting
Class discussion:: current internal practice and existing KRIs
Session 2: Root Cause Analysis for better controls and better KRIs
Root cause analysis is possibly the most powerful tool in risk management. When pushed to its limits, it produces a comprehensive diagnosis of the failures that have led to an incident, opening the way for better controls and preventatives KRIs. It also produces effective lessons to be learnt across the organisation. The “bow-tie” is a well-known tool in the non financial industry for root cause analysis. It proves to be very popular when applied to the financial services. Participants will have a chance to apply it and evaluate its benefits. The session is supplemented by a summary of scientific research on the types and causes of human error, for a better risk mitigation response.
Root Cause Analysis: the bow tie: benefits and applications
Why do we make mistakes?
Typology and causes of human errors
Understand and treat the cause of human error
Prevention by design
Group work: perform a root cause analysis, feedback to the class
Session 3: Risk Appetite Definition, Statement and Communication
One of the roles of the risk function is to assist the Board in the definition of his risk appetite.
Every risk management should be at ease with the concept and know the basic elements of actionable risk appetite and the way to identify them.
Industry guidance on Risk Appetite
Making Risk Apptite actionable
Risk Appetite Statements: Features and Examples
Risk Appetite structure and templates
Definition and Governance: Communicating Risk Appetite
Links with the other parts of the framework
Case Studies & Structured exampels of risk appetite statements, plus class exercise: formulate risk appetite and tolerance statements for one key risk.
Session 4: Influencing Risk Culture
A soft topic for last, as an inspiration for more. Based on a personal adaptation for the Financial Services of The Influencer methodology by Patterson at al. this session highlights the drivers of motivation (personal, social, structural) combined with the necessary condition for action (willingness and ability) to develop key steps influencing organisations towards a better risk culture.
Defining Risk Culture
Acting on behaviours: the Influencer
Necessary conditions: willingness and ability
Risk Culture: DESIRE steps: Define – Inspire – Support – Enable – Reinforce - Evaluate
Assessing risk culture
Case studies and Group work: Plan your own culture change
Conclusion: learning points, takeaways and action plans
What have you learnt?
What will you remember?
What will you apply?
After the course, participants will know about:
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