The Institute of Risk Management

Syllabus

Unit one: Background to the financial services sector

Explainswhatwemeanbyfinancialservicesandwhythesectorisimportanttotheglobaleconomy

Providesabackgroundtothedevelopmentofthebankingandinsuranceindustriesandtheimportanceofrisktakingwithinthesector

Explainstheinterconnectednatureofglobalfinancialmarkets

Unit two: Key concepts in financial risk management

Examinesthekeyfinancialandstatisticaltechniquesthatunderpinriskmanagementinthefinancialservicesindustry,suchasvalueatrisk(VaR)andMonteCarlosimulations

Describestheimportanceoffinancialandnon-financialquantification

Outlinestheconceptofeconomiccapitalandothermethodologiessuchasscenarioanalysisandstresstesting

Brieflyconsiderstheapplicationoffinancialrisktechniquesinassetmanagementandhedgefundbusinessesaswellastoother,non-financial,businesses(e.g.tradingdesksinenergyfirms)

Unit three: Operational risk in financial services

Outlinesthekeysourcesofoperationalriskinfinancialservices: people processes systems externalevents

Describescommonapproachesusedtoidentify,monitorandcontrolkeyoperationalrisks,exploresquantitativetechniquesandtheimportanceofanalysisofhistoriclossandnearmissdata

Unit four: Sources and approach to risk in banks

Explainskeysourcesofriskwithintheretailandwholesalebankingindustry

Considerscommonapproachestotheidentification,assessmentandcontrolofkeyrisksincluding: creditrisk marketrisk operationalrisk liquidityrisk

Unit five: Development of the regulatory framework for banks

Setsthecontextfortheroleofregulationinbanking,includingconsumerprotectionandimprovingconfidenceinfinancialmarkets

Demonstrateswhyregulationseekstoimposeminimumriskmanagementstandards

ExplainsthebackgroundandlimitationsoftheBaselCapitalAccord

OutlinesthesubsequentdevelopmentofbankingregulationthroughthedevelopmentofBaselIIandpreparesyouforthelaterunitthatintroducestheBaselIIIproject

Detailsthestructureof,andkeyrequirementsof,theBaselAccordandexplainstheThreePillarsandresponsesrequiredwithinthem,includingthePillar1calculationsandtheinternalcapitaladequacyassessmentprocess(ICAAP)

IRM Financial Services QualificationGovernment is

The Institute of Risk Management

ExplainsthebackgroundandpurposeoftheUSSarbanes-OxleyAct2002andtheresponsebymajorfinancialinstitutions

Unit six: Sources and approach to risk in insurers

Explainsthekeysourcesofriskwithinthelifeandnon-lifeInsuranceindustries

Considerscommonapproachestotheidentification,assessmentandcontrolofkeyrisksincluding: insurancerisk creditrisk marketrisk operationalrisk liquidityrisk

Unit seven: Development of the regulatory framework for insurers

ConsidersthedevelopmentofinsuranceregulationstartingwithSolvencyI,anddiscusseswhySolvencyIIwasdeveloped

Examinesthebackground,purpose,structureandimplementationofSolvencyIIandinitiatives,suchasPrudentialSourcebook(PSB)(UKFSArules),andGermanysminimumrequirementsforriskmanagement(MaRisk).

ExaminesthebroaderinternationalcontextofinsuranceregulationdrivenbytheworkoftheInternationalAssociationofInsuranceSupervisors(IAIS)andlooksatthedrivebehindcountriesseekingequivalencetoSolvencyII,forexampleBermuda,SwitzerlandandMexico

ConsidersthedevelopmentofinsuranceregulationintheUnitedStates,includingtheroleoftheNationalAssociationofInsuranceCommissioners(NAIC)

Looksattheimpactofregulationontheroleoftheriskmanagerandtheactuaryaswellasotherriskgovernanceimplications

Unit eight: Lessons from failure

ExplorestherecenthistoryoflossesinthefinancialservicessectorinparticulartheFinancialCrisisof2008

Explainshowthelossesoccurredandexaminesthedevelopmentsinriskmanagementthathaveevolvedasaresponsetotheselosses

ExaminesresponsestotheglobalfinancialcrisisbyregulatorsandGovernmentsandthepossibilityofnewglobalsuper-regulators

Exploresthekeyquestionofwhethertheglobalfinancialcrisiswascausedbythefailureofriskmanagementorhumanpractices

IRM Financial Services QualificationGovernment is

Providesanexplanationofsystemicriskanditsplaceinthefinancialservicesindustry

Emphasisestheimportanceofthebehaviouralandpeopleelementsofriskmanagement

Unit nine: Enterprise risk management (ERM) in a financial services context

ExaminestheERMframeworkinfinancialservicesbusiness,giventhecontextoftheregulatorydevelopmentsandthelessonsfromfailure,andsetsoutthecomponentsofanERMframeworkinafinancialservicesorganisation

Module Learning Outcomes

Bytheendofthemodulestudentsshouldbeableto:

understandthemainsourcesofriskinthebankingandinsurancesectors

understandtheapproachesusedbythebankingandinsurancesectorstomanagerisk

understandatypicalenterprise-wideriskmodelinafinancialservicesorganisation

identifytheregulatoryimperativesthathelpdriveriskmanagementinbankingandinsuranceandunderstandwhatregulatorsareseekingtoachieve

understandtheroleofthechiefriskofficer(CRO)andtheriskmanagementfunctioninafinancialservicesorganisation

examinewhethertheglobalfinancialcrisisdemonstratedweaknessesintheapproachestoriskmanagementandregulationinthebankingandinsurancesectorsthatwereinplaceatthetime

understandtheriskmanagementdifferencesbetweenbanksandinsurers

identifytheimportanceofpersonalandinterpersonalskills,incentives,communicationandethicsinthefinancialservicessector

IRM Financial Services QualificationGovernment is

The Institute of Risk Management