Course Overview

Overview

This three-day course provides participants with a clear understanding of the role and responsibilities of credit risk committees and how they can become a more effective part of the overall governance framework. This is done by looking in detail at the specific activities that credit risk committees review regularly as well as the context within the committee operates, including the banks’ business strategy, group risk appetite/risk tolerances and regulatory constraints. Ways in which the operational efficiency of the committee can be improved as also covered.

Attend this course and learn:

  • What best practice credit risk management looks like
  • About governance frameworks, how they are changing and where credit risk committees fit
  • The roles and responsibilities of credit risk committees
  • To put in place appropriate terms of reference (TORs) for credit risk committees
  • How to approach reviewing and challenging papers presented to the committee
  • To run effective credit risk committee meetings
  • To monitor compliance with TOR requirements and refresh them regularly

Prior knowledge

It would be helpful if participants were familiar with the governance framework for their own organization and had a reasonable understanding of credit risk. Prior experience of credit risk committees is not necessary.

Additional requirements

None

Course Content

Day 1

The Governance Framework

  • An overview of the governance framework
  • What is risk appetite and risk tolerance
  • Risk appetite and risk tolerance setting and implementation
  • Building and maintaining an effective risk management framework
  • Where credit risk management and credit risk committees fit

Exercise: Creating an effective and appropriate risk management framework

The Operating Environment

  • An overview of the operating environment within which bank’s accept and manage credit risk
  • The factors that have influenced the current operating environment
  • The causes and consequences of the financial crisis and their on­going impact
  • Basel III and other regulatory initiatives
  • Opportunities and threats – challenger banks and shadow banking

Case Study: Sub­prime lending

Stakeholder Management

  • Who are the key internal and external stakeholders
  • What are stakeholders interests
  • Why stakeholders interests are different

Exercise: Management of conflicting interests

Day 2 

 Credit Risk Management

  • An overview of credit risk and best practice credit risk management
  • Customer, product and risk types
  • Key elements of the credit risk management framework
  • Credit risk committees and the credit risk management framework

Case study:  Learning lessons from banks that performed well in the financial crisis

Credit Risk Committees

  • Roles and responsibilities
  • Reporting lines, sub­committees and divisional committees
  • Membership and decision making
  • Terms of reference
  • Administration

Exercise: Best practice terms of reference

Committee Responsibilities in Detail

  • Expanded coverage of topics including
  1. Credit risk appetite – setting and monitoring
  2. Credit risk authorities – delegation and oversight
  3. Concentration risks – setting policy and portfolio monitoring
  4. Credit policy – setting, implementation and monitoring compliance
  5. Models – review and approval of credit risk models
  • Explanation of best practice in relation to each topic

Case study: Examples of undue concentration risks in practice

Day 3

Committee Responsibilities in Detail (continued)

  • Expanded coverage of topics including
  1. Product risks – product programme review and approvals
  2. Controls –setting standards and monitoring compliance
  3. Reporting – defining reporting requirements and regular monitoring
  4. Audit reports – commissioning review and reviewing audit findings
  • Explanation of best practice in relation to each topic

Case study: Assessment and management of product risks

Credit Committee Operations

  • Preparing and monitoring annual plans
  • Agenda planning and preparation
  • Taking minutes
  • Post meeting management activities
  • Reporting on performance

Running a Successful Credit Risk Committee

  • What makes a successful credit risk committee meeting
  • Behaviors that ensure meetings are successful
  • Training committee members

Exercise: Mock Credit Risk Committee

  • Participate in a mock credit risk committee
  • Review lessons learned

Review and wrap up

Review of key learning point

Who Should Attend?

 

Trainer’s Profile

 

Course Curriculum

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