Advanced Risk Management
Course Objectives
As bankers gain experience, and progress in their careers, they are expected to hold positions carrying
higher responsibility, wherein they are required to look at the broader canvas of their assignment and get in
the habit of planning to meeting challenges that will unfold in the future. Central Banks are de-regulating
the banking sector to permit the introduction of riskier products and services. Developing this quality is
therefore becoming increasingly important because market mechanisms are becoming riskier, more volatile
and more competitive.
This combination requires bankers to develop the skill of studying, interpreting historic trends in the
following parameters, and projecting their future impact:
Interest and exchange rates
Commodity prices
Changing profile of the market players
Market practices and conventions
Circumstances that cause unusual movements therein
Bankers need to develop realistic predictive abilities and strategies based thereon. In nutshell, it implies
developing in advance the capacity for managing risks that are most likely to surface. These risks could be
in several areas, including shortfall in:
network, product and service range to face up to competition
strengthening credit, operational and market risks management capability
developing the capacity to survive the impact of changes in trade flows and country risk profile
future needs of business-related skills in the human resource and information technology, and
sustainability of the required level of skilled manpower
The objective of this course is to encourage bankers to develop the knowledgebase and skills to equip
themselves for identify and prepare for meeting these risks in the timeframes they unfold. What the bankers
are expected to develop is a futuristic approach to risk management planning to enhance the preparedness
of their banks for facing up to unfolding risks and market challenges. This skill has critical importance in
ensuring the stability of the banking sector over extended periods. Keeping this objective in view areas with
critical bearing on a bank’s stability have been included in this course.
Syllabus
1. Network
Overall profile of competition faced by the branch
Deposit base, its mix and extent of support to the bank in asset funding and liquidity management
Sale of the bank’s range of products and services by the branch
Risk asset base, its mix (legal entity types, facility and transaction types, skill support requirements,
impact on bank’s capital adequacy)
Net contribution to bank’s profitability
Logistics problems (geographical access, connectivity, supervision and control)
Competitive advantage/weakness
Volatility (susceptibility of operations to disruption caused by external factors)
2. Product and Service Range
Developing customers bases in the following market segments
Designing the product or service package
Infrastructure needs
3. Credit, Operational and Market Risks Management Capability
a) Credit Risk
Trend Analyses
Changes in borrower psyche resulting from
Expected loss model
Changes in the profile of support services
In-house risk assessment capacity
b) Operational Risk
Definitions of operational risk
Operational risk management framework
Operational controls
Self-assessment versus risk assessment
c) Market Risk
Volatility trends in
Developing trends in BOP and PSBR
Trade flows
Geopolitical uncertainties and impact on trade flows
Development of monopolies, powerful groups in the domestic markets
Trends in contract performance ethics
Building-in risk factor into lending operations
d) Liquidity risk
4. Futuristic Skills in The Bank’s Human Resource
Human resources
Risk assessment skills
Specialization in financing specific business sectors
Financial and risk analysis
Specifying risk monitoring requirements
Service delivery skills
Familiarity with service requirements
Familiarity with functioning and capability of delivery systems
System weaknesses and contingency measures
Supervisory skills
New demands created by the variety of services and products on sale
Remedies for the gaps in data processing and reporting system
Bank’s compliance needs
Creative skills
5. Information Technology
Future demands
Targets for eliminating manual operations:
Risks and issues involved in centralized data processing
Risk involved in software change
6. Sustainability of The Required Level of Skilled Workforce
A rational and clear relationship between employee empowerment, performance support, and actual
output to consolidate the credibility of the reward system
Continuously monitor industry averages of compensation for various cadres
Devise career development paths and demonstrate their unambiguous implementation by up-grading
all deserving employees
Visibly convey to the employees the bank’s commitment to up-grade employee skills to improve their
ability to contribute and thus move up the line
