Course Overview

Course Objectives

Addressing the fundamental causes of operational risk, this course demonstrates how the correct mix of philosophical and operational elements combine together to ensure success. It provides a simple structure for control and automatic mechanisms for detection and resolution of problems, using an evolutionary approach your new knowledge.

An extensive but very practical training workshop designed to provide practitioners with:

  • A systematic approach to the control of all operational risks within an ERM culture
  • A preemptive control strategy providing the ability to identify, monitor and control those key areas of exposure
  • The skills to analyse, measure and manage operational risk using best practice techniques, in line with

Basel requirements

  • The ability to detect and control the potential for fraud and manipulation
  • How to protect your institution against a “rogue trader”
  • An introduction to the latest responsibility management philosophy and practice which will create the correct environment for high quality, risk mitigation and success
  • An understanding of the new role of today’s C.R.O. and other risk departments
  • The experience to develop a properly focused management information structure to promote risk awareness and facilitate control


This course provides a clear structure for control and automatic mechanisms for detection and resolution of problems, using an evolutionary approach.

A series of real life case studies illustrate where problems originate and how they can be solved in a simple systematic way.

Who should attend

  • Risk management professionals involved in the design, development, execution and supervision of banking operational risk management system.
  • Executives in support operations such as IT, compliance, legal, audit, business analysis, regulatory reporting.
  • Participants should have about 3 years of relevant experience in risk management related functions.


Day 1

Defining Operational Risk

  • Define the elements of operational risk
  • Introduce the value of a quality environment and the need for a sound and responsible management
  • philosophy

The role of quality in controlling and reducing risk

  • Achieving first time quality
  • The management of quality
  • The use of optimum control points
  • Key risk controls
  • Cause & effect analysis
  • Generic cause factors

Case studies: Problem origination and escalation

This case study will show how big problems and risks can originate from relatively insignificant cause elements and how these problems can be prevented at source.

Case study: Video “Real Life Documentary of a Banking Collapse”

Followed by group discussion concentrating on internal and external failures and its relevance to today’s highly complex and changing environment.

The role of responsibility management

  • Its use in controlling risk
  • How to implement
  • Empowerment
  • Allocation and acceptance of responsibility
  • The Dangers of short term strategies

Day 2

The role of the middle office in controlling and mitigating risk

  • Middle office functionality explained
  • The middle office as the catalyst for control
  • The co­ordinator

Case study: Allied Irish Bank (ALLFIRST)

  • This case study will clearly highlight how a lack of proper controls, knowledge and infrastructure can have such devastating consequences. It will also show how this could have been identified and easily prevented.

The use of limits as a control mechanism

  • Guidance limits and mandatory limits
  • Positions
  • Volumes
  • Credit/Settlement
  • Outstandings

Case studies: The use of stop loss limits

Principles of hedging to reduce risk

  • Hedge products
  • The process of hedging

Case study: How to hedge using derivative products

New products steering committee

  • Evaluating and controlling risk
  • Pre­empting problems
  • Identifying the risks inherent in a proposed new product and engineering its processing into existing work practices and procedures

BCP disaster recovery

  • The role and responsibility for operations risk managers

Day 3

The BIS/Basel Accord as it relates to operational risk

  • Key points in the new Basel Capital Accord

Discussion: The implications for risk managers

  • lMain objectives and implementation plan


Implementing operational risk management within an “enterprise risk management” structure

Organisation and reporting lines

  • lEstablish best practice reporting structure which includes:

­ The board


­ Line managers, risk managers, audit and compliance

Using risk indicators: The role and purpose

Case examples: KRI, KPI, KCI – Historical and predictive

Analytical applications

  • Detecting, analysing and controlling risk elements

Build an operational risk scoring process

  • Review of the major types of operational risks
  • Measurement framework
  • Scoring approaches
  • Critical success factors
  • Identification and prioritisation of key risk factors
  • Establishing a risk hierarchy

Meeting the Central Banks requirements for BIS Basel Accord

 Group discussion: The benefits/pitfalls of risk models and measurement systems

Day 4

The role of management information in controlling risk

  • Highlighting risk areas and non­compliance
  • Documenting and authorisation of exceptions and excesses
  • Reports design and structure
  • Getting focused

Case study: Hedge fund risks

Group discussion on its relevance to today’s financial and operational risks

The systematic control process workshop

  • An analysis of the control process from initiation through to settlement and reconciliation with detailed examination of:
  1. Pre­dealing controls
  2. Dealing controls
  3. Processing controls
  4. Payment
  5. Position
  6. Reconciliation
  7. Accounting
  8. Documentation
  9. Reporting

This section takes the delegate on a step­by­step journey through each stage of the process with real life case studies and examples of problems, risks controls and solutions. It will provide a generic and systematic control process to limit and control risk at every stage.

Case studies and real­life examples: Including back office frauds

Case study: “The Biggest Fraud Case in Banking History” – Société Générale Paris

Despite millions of US$ spent on highly developed IT and risk management systems, one person went undetected for years building up positions of $50 billion and losses of US$10 billion! Société Générale is just another failure in a very long line of banking failures/crisis in which the only real difference is the size of the actual loss.

This session will clearly demonstrate how the middle office, back office and other departments with responsibilities for risk could have easily prevented this fraud.


  • Operations Managers
  • Back and Middle Office Managers
  • Risk Managers
  • Treasury Managers
  • Internal Control Officers
  • Auditors / Compliance / Accountants
  • Regulators

Trainer’s Profile

Course Curriculum

Unit 1 Waiting
Unit 2 Waiting
Unit 3 Waiting

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