Operations Risk - Active Management & Compliance

Athens, Greece: 17 & 18 June 2019



This course is an intensive introduction to Operational Risk Management and Mitigation. It is designed to provide a practical "hands-on" approach to participants which will furnish them with all the tools and techniques they need to begin implementing what they have learned almost as soon as they return to the office.

The underlying course philosophy is to move the participants beyond the largely theoretical international compliance requirements for operational risk (specifically those contained in the Basel Accords), and into an understanding of the practice of operational risk management and an ability to actually implement these procedures.

As the size and complexity of financial institutions has increased, so too have the challenges of understanding and reducing operational risks down to truly manageable levels. Increased regulatory concern and scrutiny have also increased the cost of operational risk events in the shape of outright financial loss, regulatory fines and declining customer confidence.
Operational Risk Management (ORM) is an effective tool for not only maintaining but increasing, bank profits, shareholder value, public perceptions and goodwill.

Executed properly, improvements in ORM can lead to substantial financial, reputational and regulatory benefits – all this adds up to increased profitability, greater financial stability and improved customer satisfaction – in short, a better safer bank/ financial institution.

But, to achieve these gains, financial institutions must apply a consistent and comprehensive approach to managing their operational risks. They must also understand that this approach is fundamentally different from the approaches that they use in managing market, credit and liquidity risks.

The objectives of this training course is to provide all staff, irrespective of whether they work in the front-, middle- or back-office, with a sound foundation in the theory and practice of Operational Risk Management. This training is provided in a practical "hands-on" manner that allows them to implement what they have learned easily and effectively the minute they return to the office.

How you will benefit

  • Discover the full scope of Operational Risk.
  • Explore the key Operational Risk implementation issues.
  • Recognize the access issues for consumers and businesses.
  • Discover how operational costs can be reduced and efficiency increased through effective Operational Risk Management.


No formal requirements, though it is recommended that participants should have basic business knowledge and a broad familiarity with fundamentals of business finance.

Who should take this course?

  • Senior management, executives or directors within the financial services, banking, and insurance sectors. Specific roles that would benefit include: Financial Officers, Risk Officers, Internal Auditors, Operational Risk Managers, Compliance Officers, Staff with roles and responsibilities in operational risk in risk management departments, businesses and central departments, All front-, middle- and back-office staff in operational roles.
  • This course is not restricted to management staff alone but to all staff who are required to be "Operational Risk" aware.

Teaching Method

This is a highly interactive course comprised of presentations, case studies, multidirectional discussions and comprehensive exercises.
Most importantly it will offer participants, opportunities to plan such work within small working groups, providing practice in the application of the techniques and tools generating active participation.

Learning Objectives

  • An understanding of Risk in all its facets
  • What the Basel Accords say about operational risk and its mitigation
  • An understanding of Operational Risk Techniques for assessing, managing and mitigating Operational Risk
  • A link between Operational Risk management theory & practice
  • A clear "road-map" on how to implement a Operational Risk management structure them in practice in a banking organization.
  • Practical case-studies

Key Benefits Include:

  • Limited course spaces on a first come, first accepted basis
  • Pre-course questionnaire to establish your individual and business concerns
  • All course sessions are supported with several case studies to ensure delegates gain a practical understanding
  • Comprehensive take-away course documentation

Course Content


What is risk?

  • Operational Risk - The big picture
  • Dimension & drivers of risk management
  • Business drivers
  • Regulatory drivers
  • Rating Agencies & risk
  • Cross-border implications
  • What is the value of Operational Risk Management?

Risk Types

  • How we categorize risks
  • What is covered under Basel II?
  • Risk categories
  • Basel's risk coverage
  • Operational risk categorization
  • The financial risk management environment
  • The operational risk management environment
  • The technical Implications of operational risk management

Risk & Capital - An Introduction to Basel I, II and III

  • What is capital?
  • Capital in financial institutions
  • The BIS capital standards
  • Basel's three pillars
  • Basle's operational risk options
  • Implementation considerations
  • Implementation of Basel
  • The Pillar II maze

Managing Operational Risk

  • Implementation issues
  • The governance process
  • Setting risk management objectives
  • Building a risk culture
  • Examples of a staff risk culture
  • Examples of management risk culture
  • Why are risk cultures important?

Operational Risk –Practical Examples

  • Participants are led through a series of operational risk failures in recent years aimed a illustrating the wide variety of operational risks that occur in reality.
  • Case Study: We take detailed look at the US$ 7.2 billion loss at SocGen, its causes, the key warning signals that were overlooked, and the consequences for the financial industry.
  • Case Study: Understanding why legacy systems pose an operational risk.
    Why are so many banks facing recurring IT outages and IT related crisis? We look at the evolution of IT technology in the financial sector and understand why methodologies used have created a huge operational risk potential for some of the largest banks.
  • Group Discussion: How to solve the legacy system problem.

Key Elements in Managing Operational Risk

  • The core issues in managing operational risk
  • Risk Analysis
  • Determining the "Risk Appetite"
  • Risk impact/ Event frequency
  • Impact vs. Probability
  • A generic case study

Operational Risk Financing

  • Risk financing
  • Optimizing risk & reward
  • The cost of risk
  • The operational risk financing program
  • Operational risk financing mechanisms
  • How financing methods are applied

Methods & Models

  • Measurement methods
  • The Loss Modeling Method
  • Monte Carlo simulations
  • Operational risk & bank strategy
  • Quantitative & Qualitative approaches
  • Key Risk Indicators (KRIs)
  • Operational risk & the business cycle
  • Problems in identifying operational risks

COSO ERM Framework

  • COSO - an integrated risk management framework
  • The COSO framework
  • COSO in finer detail
  • Codification of the 17 COSO Principles

The Black Swan

  • The challenges of outlier events for contingency planners
  • Understanding a “Black Swan” event and its principal characteristics.
  • We examine the nature of a Black Swan event
  • Challenges for Planners, Strategists and CEOs.
  • How can you mitigate a Black Swan event?
  • Case Study: Can recent outlier events, like the eruption of Iceland’s Eyjafjallajökull volcano, the Deepwater Horizon catastrophe and the Japanese Tsunami be seen as black swan events? Gain a deeper insight into some of the subtleties of operational risk in the real world.

Operational Risk & Basel

  • The BIS definition of operational risk
  • BIS standards for managing operational risk
  • Basic Indicator Approach (BIA)
  • Business Lines Approach
  • Advanced Measurement Approaches (AMA)
  • Loss event types
  • Criteria for the Advanced Measurement Approach

All Basel material is current and up-to-date in terms of current BIS developments

Managing Operational Risk under Basel - A "Hands-on" approach

  • Basel Standards
  • Basel's three approaches

"Sound Practices for the Management and Supervision of Operational Risk"

  • Principles for the management of operational risk
  • Sound operational risk governance
  • Each of the 11 Principles are examined in terms of their content, meaning and implementation factors
  • Responsibilities


Developing an appropriate Risk Management Environment

  • Policy & structure
  • Developing an appropriate risk management environment
  • Implementation
  • Mapping risks to controls
  • Understanding risks, goals and priorities
  • Prioritizing risk based on probability & impact
  • Establishing responsibilities for risk management
  • Mapping risk strategies to categories of control
  • Designing & Documenting specific controls
  • Implementing risk management controls

Defining the Categories of Operational Risks

We examine the BIS categories of operation risk in terms of specific examples. The categories covered are:

  • Internal Fraud
  • External Fraud
  • Employment Practices and Workplace Safety
  • Clients, Products & Business Practices
  • Damage to Physical Assets
  • Execution, Delivery & Process Management
  • Business Disruption & System Failures

Products & Operational Risk

  • Case Study: Poor financial product design and Operational Risk
  • The recent global financial crisis was triggered by the Sub-Prime Mortgage problem in the United States. The repercussions are still being felt today bank after bank are sanctioned with fines and other penalties. This case study clearly illustrates how insufficient or total lack of attention to the basic principles of Operational Risk Management in the detail and stress testing of the financial products based on Mortgages, its various derivatives and their processes and operational led to financial meltdown in the US and worldwide financial contagion.


Causes & Consequences – The Bow Tie

  • The math of operational risk management
  • Causes & consequences of loss events and what they tell us
  • The Bow Tie Diagram – building and using this method to create effective operational risk management controls

Methods for Assessing Operational Risks

  • Four basic assessment methods
  • Loss data collection (internal & external)
  • Using loss data
  • Internal data
  • External data
  • Scenario analysis
  • Using scenarios
  • Tabletop/ Desktop exercises
  • Making tabletop exercise effective
  • Why exercise? Why use scenarios?
  • Statistical techniques

Desktop Exercise: Scenarios form the basis for a desktop exercise in which participants use and develop their newfound operational risk management skills to work through the simulation of a real risk event.

A Risk Assessment Model

  • The process
  • Environmental survey
  • Technology inventory
  • Identifying & assessing the operational risks (including an illustrative operational risk management plan)
  • Minimum control requirements
  • Risk identification tools

Current Operational Risk Management Themes in Banking

New technologies and practices are changing the nature of bank operational risk in many dramatic ways. In this section we explore a selection of current and developing "risk themes" and get to grips with how the operational risk profile is changing in the constant struggle between profit and prudence.

This is a fast changing area and this section of the course is being constantly updated.


  • The final case study examines and analyses a recent rogue trading “event”
  • Kweku Adoboli – from rising UBS star to rogue trader.
  • This case study based on recent events provides an in-depth examination of operational risk management failures at international bank UBS.
    We examine what went wrong and what lessons can be learned from these events.
    Included in these concluding case studies is a special section on Rogue Traders in which we cover issues such as;
  • The psychology of the rogue trader
  • Types of traders
  • The FSA investigation and their findings
  • What other rogue traders make the rogue traders "league table"?
  • Ranking Adoboli in the rogue traders league

What others are saying about this course

"Clear and effective slides"

"The instructor made clear examples and the slides were structured in a meaningful way, easy to follow"

"The instructor was very knowledgeable and explained well in a clear way"

"Thanks to the course, I could see specific principles for the management of operational risk"

"Very good course with a concise and practical description of the thinking behind risk management and what it is"

Your Course Leader

Richard Barr is a Principal Associate at Citadel Advantage Ltd. Richard holds a B.S. in International Business Administration from San Jose State University in California. His professional experience spans over 20 years, 5 of which were spent with Wells Fargo Bank. Another 5 were spent honing his global banking skills, when Richard was intimately involved with International Trade Finance, Real Time Gross Settlement and Cross Border Banking. The past 9 years have been in the private and high-tech sectors providing high-level consulting services, business analysis, project management and training to a wide range of banking clientele across the globe.

He has spent extensive time servicing a diversity of "financial institutional" clients, in South Africa, Poland, Sweden, Ireland, Netherlands, Greece, Bermuda, Malawi, United Kingdom and across North America. Clients that Richard and Citadel Advantage have dealt with such notable firms as AIB Bank, Eurobank, ABSA Bank, CitiBank, Swedbank, INDEbank, IBM, Montran and Fundtech, as well as many others.

Richard has also filled the role of advisor to central banks on payment systems and technical payments issues. Furthermore, key staff from the Bank of England, South African Reserve Bank, Central Bank of Ireland and Bank of Portugal who have attended training sessions presented by Richard.