RMBI 5C /12 Introduction to Risk Management in Banking & Insurance Unit Leader: Trevor Williamson

RMBI 5C /12 Course Structure Delivery Modes  Lectures  Tutorials  Moodle support online Modes of Assessment 1.Assignment (40% of total unit mark) 2.Final Examination (60% of total unit mark) Staffing Lecture / Tutorials - Trevor Williamson – Room Tutorials – Graeme Elgin – Room

RMBI 5C /12 What is Risk Management? “Risk Management is a formal process that enables the identification, assessment, planning and management of risks” (2008) Merna, T., Al-Thani, F. Three stage process……… 1. Identification 2. Analysis of risks specific to the organisation 3. Responding to the risks identified (avoid, transfer, accept & manage, mitigate)

RMBI 5C /12 So what’s in it for me? Knowledge and understanding of… the origins, nature and evolution of business and financial risk; the concepts, models and techniques for measuring, monitoring and managing risk; the regulatory framework, compliance systems and procedures; capital, liquidity and solvency requirements in banks and insurance companies; strategic, operational and financial considerations that influence the decision of organisations to self-manage or transfer risk; the general structure and function of insurance and reinsurance companies; the underlying principles and technical processes involved in the management of insurance companies.

So what’s in it for me Ability to… describe and explain the nature of business and financial risk and methods of managing risk; describe and discuss the implications of the regulatory framework within which risk management decisions are taken; demonstrate awareness of risk management and underwriting principles, processes and techniques; describe and explain strategies to monitor and control risk, and the forces that influence an organisation’s choice of strategy for managing risk; demonstrate an appreciation of the concepts and methods that can be used to assess the performance of risk management strategies, and the financial performance and strength of companies and financial institutions. RMBI 5C /12

Case Studies £27bn Northern Rock (Liquidity risk) £827m Barings Bank (Fraud / Operational risk) £481m Allied Irish Banks (Fraud / Operational risk)

RMBI 5C /12 Specific Study areas Nature of risk Root causes of the financial crisis Role of the risk manager & enterprise-wide risk management Risk measurement Financial regulation and corporate governance Basel accords Credit risk Operational risk Liquidity risk Interest rate risk Hedging Securitisation Insurance – Functions, Market, Regulation, Underwriting, Investment of funds, Organisation strategy & performance

Questions ??????? – Room RMBI 5C /12