Banking Risk Management

Introduction:

It can be said that knowing, assessing, and managing risks are key factors in a bank’s success, prosperity, and achievement of its objectives. While risk-taking is intended to generate higher profits, failure to manage these risks scientifically and properly may lead to lost revenue and failure to achieve the bank’s strategic objectives. Therefore, a proper understanding of banking risk management, risk self-assessment, and control procedures requires answering several questions:

• What are risks and their types?
• To what extent are the bank’s main risks known, analyzed, and assessed?
• What are the methods for measuring, assessing, and managing the likelihood of risk occurrence and their relationship to returns?
• What are the methods for examining and assessing the potential impact on business?
• How can effective control methods be identified to mitigate risks?
• What tasks can risk management perform in banks?
• What are risk self-assessment systems?
• How are control procedures implemented?
• What is the role of the internal audit department in risk management?

Program Objectives:

• Provide participants with the basic concepts of banking risks.
• Introduce participants to the concept of banking risk management and its importance. Introducing participants to supervisory oversight procedures under the Basel I, II, and III Accords.
• Introducing participants to internal and external sources of funds in banking institutions.
• Defining credit risk and its measurement methods.
• Understanding operational risk and its measurement methods.
• Defining market risk and its measurement methods.

The program is directed at:

• Managers and employees of risk management departments in banks and financial institutions
• Those interested in lending and credit in financial institutions
• Credit managers in banks
• Managers interested in investment management and dealing with financial distress
• Department managers in banks

Program Topics:

Part One: Banking Risks: Concept, Types, and Measurement Methods

First: Financial Risks

• Concept of Risk
• Types of Risks
• Financial Risks
• Credit Risks
• Liquidity Risks
• Inflation Risks
• Exchange Rate Fluctuation Risks
• Interest Rate Risks
• Reputational Risks

Second: Operational Risks

• Introduction to Operational Risks
• Sources of Operational Risks
• Definition of Operational Risks
• Types of Operational Risks
• Internal Risks
• External Risks
• Practices Related to Customers, Products, and Businesses
• Damage to Physical Assets
• Execution and Transaction Management
• Legal Risks
• Methods of Identifying Operational Risks
• Self-Assessment or Risk Assessment
• Risk Surveys
• Key Risk Indicators
• Financial Fraud (Embezzlement)
• Counterfeiting
• Theft and Robbery
• Cybercrime
• ATMs
• Credit Cards
• Points of Sale
• Internal Embezzlement Through Employee Collusion
• Automated Data Exchange
• External Embezzlement
• Automated Retail Operations

Third: Market Risk

• Definition of Market Risk
• Market Risk Framework According to Basel Accords
• Theoretical Analysis of the Relationship Between Market Risk and Liquidity Risk and the Impact on the
• Stability of Banking Resources
• Types of Market Risk:
• Interest Rate Risk
• Credit Spread Risk
• Commodity Price Risk
• Stock Price Risk
• Exchange Risk (Currency Risk)
• Methods Used to Predict Market Risk
• Market Risk Measurement
• Specific Measures
• Comprehensive Measures
• Methods of Addressing Market Risk
• Definition of Liquidity Risk
• Relationship of Liquidity Risk to Banking Operations
• Dimensions of Liquidity Risk
• Liquidity Value of Some Assets
• Source of Liquidity Risk
• Liquidity Coverage Ratio
• Liquidity Control and Supervision
• Credit Risk
• Definition of Credit Risk, Its Causes, and Types
• Origin of Credit Risk
• Importance of Estimating, Measuring, and Managing Credit Risk
• Divisions of Credit Risk
• Credit Risk According to the Nature of Credit
• Credit Risk According to the Source of Credit
• Types of Credit Risk Measures
• Measuring Credit Loss Risk Expected

Part Two: Risk Analysis and Measurement and Preparation of a Management Plan

Tools for Measuring and Analyzing Banking Risks

• Statistical Tools for Measuring Financial Risks
• Financial Analysis Tools for Measuring Financial Risks
• Finance Analysis Tools for Measuring Financial Risks
• Following up on Financial Risk Measurement and Reporting
• Methods for Managing Financial Risk Crises
• Tools for Controlling Risk Response
• Implementing and Evaluating a Risk Response Strategy
• Risk Documentation and Preparing a Risk Report

Banking Risk Analysis and Preparing a Management Plan

• Technical Analysis of Financial Risks
• Risk Analysis Methods – Quantitative and Qualitative
• Estimating Price Volatility and Correlation
• Preparing a Risk Management Plan:
• Creating an Appropriate Environment and Sound Policies and Procedures for Risk Management
• Factors Necessary for Successful Plan Preparation
• The Role of Stakeholders in Plan Preparation
• Methods and Techniques Used
• Contents of the Risk Management Activities Plan
• Identifying and Defining Risk Indicators and Indicators
• Managing Financial Reserves to Address Risks
• The Role of Internal Audit in Detecting Financial Risks and Financial Fraud

Banking Risk Management Process and Mitigation Tools

• Financial Risk Management Strategies
• Gap Analysis, Period-Gap Analysis
• Asset-Liability Balance Management
• Value-to-Risk It and the adjusted rate of return
• Developing policies to mitigate financial risks
• Financial derivatives and alternative responses
• Reviewing policies adopted