Practical Risk Management

Learning Outcomes

  • Risk Management
  • Basel III
  • Options Contract
  • Market Risk
  • Credit Risk
  • Operational Risk


Created to help risk management and financial executives start and maintain a risk management program, Practical Risk Management discusses the entire process from exposure identification through implementation and monitoring of the program. Risk management is arguably one the most important subjects, especially for Investment Banks who are under more and more scrutiny from regulators. As a result, we have invested heavily into this course to make sure it is engaging and practical. We draw upon real-life case studies such as Lehman Brothers, Rogue Traders at UBS, BNP and SocGen.

Program Overview

Risk Management and Basel III
  • Why Risk Management is so crucial to financial institutions?
  • Basel III – The what, when, how, why and where?
  • How should Risk Management be implemented?
  • How much Capital does a firm require?
  • How to implement a Value-at-Risk (VaR) framework?
  • What are the competing functions within a Bank with regards to risk management?
Simulation: Market, Credit, Operational Risk
Market Risk
  • Know the definition of market risk
  • Understand the elementary statistical concepts of a probability distribution, random variable, expected value, mean, variance, standard deviation, percentile, correlation
  • Understand how statistical concepts can be used to model the random nature of financial market prices
  • Understand the use of the natural logarithm and exponential function when modelling financial market prices
  • Know the shape of the normal distribution and the lognormal distribution
  • Calculate the Value-at-Risk using Excel/Python
Credit Risk
  • Know the definition of credit risk
  • Understand the concepts of default probability, Loss Given Default (LGD), Recovery Rate (RR) and Exposure at Default (EAD)
  • Understand the concept of Expected Loss
  • Understand the function of Credit Rating Agencies
Operational Risk
  • Know the definition of operational risk
  • Know the definition of rogue trader risk as a specific example of operational risk
  • Know case studies of rogue traders: Nick Leeson and Jerome Kerviel
  • Know the key aspects of the BCBS 11 Principles for the Management of Operational Risk
  • Understand the Basel II Advanced Measurement Approach (AMA) to quantifying operational risk

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