Course description
Risk Appetite is a fundamental element of a consistent entreprise risk management framework, driving firms to set risk exposure limits, diversification, risk mitigation and monitoring to contain risks and their possible adverse events within tolerable limits, while allowing for necessary risk taking.
Preventive key risk indicators (KRIs) signal increases in risks before incidents occur. It is possible to design preventative KRIs, provided that organisations understand their risk drivers and are willing to take a renewed look at their reporting practice on performance and controls.
Through a combination of presentations and practical exercises, this Masterclass offers a full review of the role and attributes of risk appetite (both for financial and non financial risks) and KRIs in the financial services and banks in particular. It clarifies some confusing ideas about KRIs and offers insight on their role in a risk management framework. The course also reviews many examples of the best performing KRIs in banking and financial markets activities and proposes a step by step methodology to select and design preventive KRIs. Finally, some risk-specific sections of the course include KRI for credit risk, project management and conduct.
Course Highlights
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Provide a comprehensive overview of indicators
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Understand how to select preventive KRIs
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Discuss process mapping and control design
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Apply KRI set to specific risks such as credit and project management
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Review indicators for risk culture and conduct
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Use KRIs as performance management tools
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Suitability - Who should attend?
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Chief Risk Officers ;
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Heads of Operational Risk ;
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Enterprise Risk Managers ;
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Operational Risk Managers ;
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Internal Auditors ;
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Compliance Officers ;
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Regulators.
Outcome / Qualification etc.
Learning Outcomes
- Design consistent risk management framework, top-down from risk appetite
- Describe risk appetite statements from bottom-up observations of risks and controls
- Specify relevant indicators for various risks
- Focus on preventative risk indicators for some specific banking activities
- Use indicators as an effective management tool
- Define threshold levels for KRIs that translate corporate risk appetite
- Comprehend the methods and strategies to use KRIs efficiently
Training Course Content
DAY 1: Actionable Risk Appetite
Session 1: Risk In, Taxonomy and Risk Interdependencies
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ERM in the financial services
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Risk identification: tools and techniques
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Exposure and vulnerabilities
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Rising risks in the financial markets: CRO surveys
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Risk dependencies: the connectivity view
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Commonalities between financial and non-financial risk management
Class discussion and experience sharing: rising risks in organisations
Session 2: Principles and Design of Actionable Risk Appetite
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Return: the missing piece of risk appetite
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Risk appetite governance: role of the Board and risk function
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Risk appetite and risk drivers
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Risk appetite for credit risk (policy)
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Risk appetite in market risk: exposure and trading limits
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Risk appetite in non financial risk: slowly maturing
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Structure of actionable risk appetite
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Cascading risk appetite: RCSA & Indicators
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Top-down and bottom-up approaches to risk appetite
Class Exercises: Define a risk appetite statement for key risks
DAY 2: Identifying and Selecting Preventive KRIs
Session 3: Preventive KRIs: a method
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Features of preventative KRIs
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Selecting and designing KRI steps by step
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A typology of KRIs: Exposure, stress, causal and failure
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KRI design and reporting
Group work: Opportunity for participants to apply the method and share their findings with others in a guided exercise
Session 4: Root Cause Analysis for KRI Identification
- Root cause analysis and lessons learnt from large incidents
- Cause of the cause: The benefits
- Bow tie tool: common failures and systematic patterns
- Identifying causal KRIs
- Root cause and risk prevention
Group work: Apply a bow-tie analysis to one of your incidents and share the lessons learnt
DAY 3: Control Design & KRIs for Specific Risks
Session 5: Control Function for KRIs
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Role of control functions in KRIs and risk appetite?
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Process mapping: Highlights risks and controls
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KCIs: Assessing controls: design and effectiveness
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Typology of controls
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Typology of human error: The work of James Reason
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Prevention by design
Group work: Delegates will work on process mapping of relevant activities and share results with the class
Session 6: Indicators for Compliance, Conduct and Culture
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Conduct and Compliance: metrics and behaviours
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KRI in AML / onboarding risk: case study
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Case study of a Conduct and Culture change programme
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Reporting on Culture
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Other influencers than KPIs
Group work : define and design relevant KRIs for an operational risk of your choice
Session 7: KRIs for Project Management and New Initiatives
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Project management and risk management involvement
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KRI for projects
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Reporting on projects and changes
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Testing KRIs: Assess the validity of your indicators
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Governance around risk indicators:
Class discussion and benchmarking: KRI definition and governance in different institutions
Why choose Chapelle Consulting
1,000+ course participants per year
2,000+ webinar attendees per year
25+ courses delivered per year globally
Reviews
Average rating 5
great webinar thanks
The masterclass was really very useful and thought provoking. The materials were excellent, providing detailed case studies and practical examples to support the theory. The co...
Expenses
870£
insightful