Fundamentals of Risk Management Training Course

Everyone in the finance world needs a firm understanding of risk - especially in light of the credit crisis. Rather than adopting the traditional approach to risk training that tends to be rather academic, the IFF Fundamentals of Risk Management course is developed with the needs of practitioners in mind. The course covers the spectrum of issues in risk management and has been recently updated to reflect the impact of the credit crunch.

This course has been designed to cover fully and explain clearly the theory and practice of risk management at an introductory level, with an emphasis and focus on understanding the principles of risk management and the more complex tools used by the experts.

The programme draws upon the particular issues and problems thrown up by the credit crisis and explains the mechanics behind these scenarios and what could have been done differently to negate some of the impact.

Scroll down for agenda or book onto this course.

An Introduction to Risk Management

• The risk management framework
• Overview of different types of risk
• Current trends and future issues in risk management

Credit Risk Management

• Defining credit risk
  - counterparty risk
  - default risk
  - settlement risk
• Evaluating netting agreements
• How collateral management can help reduce credit risk
• Describing the credit rating process
• Credit spread analysis
• Measuring credit risk using
  - VaR
  - CreditMetrics
• Use of credit derivatives in risk management
• Credit enhancement techniques

Market Risk Management

• Defining market risk
• Identifying market risk sensitivity
  - liquidity
  - volatility
  - foreign exchange
  - term structure
• Measuring and managing market risk using
  - various approaches to VaR
  - stress testing

Operational Risk Management

• Defining operational risk
• Developing methodologies to monitor and control operational risk
• Assessing the various approaches to quantify operational risk
• Overcoming data limitation when measuring operational risk
• How to integrate operational risk into the organisation’s risk management framework

Analysing Other Types of Risks

• Political and economic risk
• Legal risk
• Liquidity risk
• Accounting risk
• Tax risk
• Model risk
• Other risks

Risk Measurement Tools

• Explaining the most commonly used risk measurement tools:
  - historical simulation
  - scenario analysis
  - variance, covariance and correlation
  - Monte Carlo simulation
  - RAPM
  - VaR
  - duration and convexity
  - risk parameters - the Greeks
  - yield curve modelling
  - stress testing
  - other tools
• Understanding the basic maths behind them
• Learning when each model should be used

Use of Derivatives in Risk Management

• When and why to use derivatives
  - options
  - futures
  - swaps
• Hedging using derivatives

Developing risk standards

• Does your board truly understand its risks?
• Risk standards for investment managers
• Finding the right balance between risk and reward for your organisation

Identifying the Essential Criteria for Implementing Risk Management Controls and Procedures

• Identifying and solving communication breakdown between front and back office to maximise risk control

Case study: Highlighting possible solutions by assessing what others have successfully done

The Legal Aspect

• Overview of new regulations:
  - EU Capital Adequacy Directive
  - BIS regulations (Capital Accord 1988 - Market Risk Amendment 1996)
  - Basel II

Course objectives:

• Analysing specific risk management frameworks and different types of risk
• Building awareness of the specific risks such as credit, market and operational
• Exploring the main risk measurement and management tools
• Understanding how risk standards are developed and identifying key criteria for implementing effective risk controls, procedures and regulatory processes