Op2M / Trainer / BankingCatalog

˝The major difference between a thing that might go wrong and a thing that cannot possibly go wrong is that when a thing that cannot possibly go wrong goes wrong it usually turns out to be impossible to get at or repair˝Douglas Adams

[Introduction]

Dear clients!

It is our pleasure to present you this Educational Program Catalog of our Op2M/Trainer line of services, in which, we hope, you will recognize the topicality and relevance of the offered programs for the present moment characterized by the insurance industry, in general, still under the pressure of the global crisis on one side, and on the other with regulatory pressure for an accelerate adoption of the new European regulatory standard.

We believe that in the today's fast-changing world, a well designed training of employees and management of financial institutions represents an essential element of their risk management strategy.

Since our "in-house" educational programs are fully focused on your organization, our team, comprising of experienced experts and practitioners and proven lecturers with international reputation, will help you

identify and plan your educational requirements,design and implement such educational programs that would

induce your teams to generate innovate ideas in a very short time, which would result in significant improvement of relevant business processes, as well as the entire risk management system, and

adopt the expressions related to the new regulatory standards as well as the latest discoveries concerning risk control and management in financial institutions, in a very interesting and understandable manner.

The below specified modules are available at the request, and can be held at the locationand at the time which suits you best.

Besides the specified standard modules, which include the most relevant topics in the segment of risk management and control in financial institutions, we also create educational programs that are completely tailored to your needs and focused on the current challenges you are facing. Such tailored programs enable you faster acquisition, distribution and application of the relevant knowledge and methods (based on good practice in control and risk management) in your organization, as well as adding the new value to your organization in a very short period of time, which is reflected in its increased competitive edge.

[Goal]

Assist in identification of competence requirements of your institution in relation to the risk control and management, and adjustment of business operations with regulatory requirements and supervision expectations,

Enable the management and key employees the insight into the methods of risk management in financial institutions based on good risk management practices,

Facilitate the understanding of the current changes related to the relevant regulatory requirements,

Convey the necessary theoretical and practical know-how necessary for the implementation of an efficient risk management framework, and

Help the senior management in managing the development of competences required for the management of risks in the contemporary business and regulatory environment.

[Op2M/Trainer Principles]

To maintain a high quality of our educational programs, and driven by the wish to fully adjust them to the needs of your institution, in designing and implementing our educational programs we adhere to the following principles:

Modularity - Our standard programs are divided into standard modules that can be combined, if required, into partial or integral programs according to segments (per component risks, i.e. per position within the framework for the comprehensive risk management, from risk identification, through risk measurement and management, to the specific risk control and reporting, and per all materially significant risk categories), as well as according to the level of complexity (basic, medium, advanced).

Flexibility - In order to fully adjust the program to the operational priorities of your organization (at the request), we analyze your available key competences in the risk control and management segment, to identify the educational requirements and tailor the educational programs to your needs. (One of the options includes testing and assessment of each participant of the structured educational program and issuing of the appropriate certificate.)

Pragmatism – All our programs are primarily related to the financial and regulatory practice of C/SEE countries, and they are oriented towards meeting of the participants' practical needs, i.e. skills and knowledge that can be integrated into the business processes of your institution in a very short period.

Quality – a long practical experience of our experts and lecturers in the financial industry on tasks and projects concerning the risk control and management, their proven expertise and long experience in lecturing, both in the Region and in the European financial centers, are a guarantee of a high quality of the structure and implementation of our programs.

Balance - Beside covering each of the topics in theory, the educational programs include an overview of the typical problems and examples from the insurance practice that the risk managers of today face most frequently.

[Offer]

We offer two sets of services within our Op2M/Trainer program:

Analysis, assessment and design of educational programs in the risk control and management segment– Includes a gap-analysis of your business goals and requirements, as well

as the available competence structure of your employees and managers, the identification of the essential competence requirements per business lines, i.e. relevant organizational units and a proposal of the optimum educational plan and program for key staff and competent managers.

text in the picture:Direktive DirectivesKreiranje potrebne svijesti i izrada plana edukacije

Creation of the necessary awareness and production of the eductional plan

Povratna informacija korisnika Customer feed-backNadzor, preporuke i opservacije Supervision, recommendations and

observationsDefiniranje uloge i odgovornosti Definition of roles and responsibilitiesMisija MissionProcjena edukacijskih potreba Assessment of the educational needs

I. Implementation of the in-house educational programs– We can offer you programs based on the Standard Op2M/Trainer

modules, as well as the customized educational programs. Op2M/Trainer offers programs of different duration and different levels of complexity, from short (half-a-day or one-day) seminars for the senior and line management, or risk specialists and key staff, over educational programs covering different segments of risk management that last several days, to a comprehensive educational program lasting several weeks (Risk Management School).

[Modules]

MODULE I Credit risk component TopicSubtopic

Introduction to the credit risk terminology

Credit risk definition, meaning and components,Credit risk parameters (PD, LGD, EaD, CCF and M)

Default risk: Default risk

assessment and measurement

Credit capacities Payment abilityProbability of default (PD): Client's solvency and creditworthinessHeuristic and quantitative PD modelsThe basic types of quantitative PD modelsIntroduction to the financial statement analysisStructure, scoring and rating of modelsLimitations of different PD models

Recovery risk: Risk of economic loss in the case of default

Collateral risk factorsEconomic loss definitionLoss given default (LGD) models - types and structureLGD model limitationsInteraction between the default and recovery credit risk component

Induced credit risks

KIKR, OIKR)

Influence of the market solvency to the credit rating characterThe issue of determining the inter-risk correlation

Credit concentration risk and limit

systems

Risk of concentration of the primary repayment sources (name vs. sectoral)Risk of concentration of the secondary repayment sourcesLimitation of the exposure measured by the size of the (regulatory, internal)capital and assets

Credit risk transfer

Credit insuranceIntroduction to credit derivatives and securitization of receivablesCredit derivatives and the global financial crisis: "skin-in-the-game" conceptand regulatory arbitrage

Portfolio management

based on the credit risk parameters

Application of parameters in practice - use of the scoring and rating models and credit risk parameters (PD, LGD, CCF, EaD and M) in managing a commercial bank portfolio

Credit risk level and basics of the capital adequacy (regulatory capital and risk-weighted assets)Credit risk components and parameters and basics of placement valuation (material significance of exposure and "small" loan portfolio, provisions on the individual and group level)

MODULE II Credit process and credit risk dynamics Topic Subtopic

Standard phases of a credit process

Components of a credit decision making process (mandatory data, determining the repayment capacity and solvency, negative information and "knock-out" criteria, collateralization analysis, standard types of crediting decision proposalsStructure, content and role of the risk control function in the credit decision making processTypes of authorization matrixes and different roles of the Credit BoardLoan review – implementation rationale and appropriate scheduleMonitoring the credit portfolio quality (EWS and Watch Lists) – timely recognition of early signs of the credit risk increase (quantitative and qualitative risk growth indicators)

Collection (and return) of receivables:a) Standard phases of the processb) Specifics of individual process phases and elements with regard tothe credit business segment (Retail vs. SME/Corporate)Basics of the debt restructuring process:a) Business and distressed reprogramming (refinancing vs.

restructuring)b) Prolongation and moratoriumc) Types of restructuring: from the restructuring of placement

to operational business restructuring of debtorsSale of accounts receivables and assignment of accounts receivables for external collection –experience, advantages and disadvantages

Risk-based optimization of the

credit process

Credit decision making:a) Exception managementb) Process optimization per product groupsForbearance and NPL: from prolongation and (late) refinancing to restructuring (in the current business and market environment)

Optimized credit decision making in retail and SME/corporatesegmentEstablishing optimum structure of the soft collection in retail and SME/corporate segmentWork-out:a) Organizational position of restructuring and work-outb) Optimum composition of a work-out teamc) Settlement with interest write-off vs. execution proceedingsd) Write-off of accounts receivables - practical examples

Structure and content of internal

acts and systematic credit risk management

Strategic-level acts: Credit institution business strategy andRisk control and management strategyOperational-level acts: Credit policy and credit risk control and management policyTechnical level: procedures, regulations and operating instructions

MODULE III Collateral management Topic Subtopic

Introduction to the collateral management

Definition and purpose of collateralsIdentification of natural hedges per basic placement groups

Definition of the collateral risk

Collateral valuation

Estimated and effective collateral valueControl of the external valuator methodology - establishment of minimum external valuation acceptability criteria for commercial banksValuation of different collateral groups - types of movable and immovable assetsWhat is the level of collateralization of uncollateralized loans?"Haircut" system - effect of specificsof the local regulationsCalculation of the internal demand for minimum collateralization based on the credit risk assessment

Ranging the collateral quality

Factors influencing the collateral qualityPractical example of ranging the collateral quality

Influence of the collateral to the credit portfolio

quality

Influence on collection - collateral liquidation (selection of the most opportune time to initiate the liquidation, cost and time required for the liquidation, collateral liquidation and pre-bankruptcy settlement)Influence of the regulatory acceptability of the collateral to the valuation of assets and capital adequacy

Collateral Scenarios and stress-resistance (collateral value)

optimization as a not-fully

standardized function

"Collateral mix" optimization

Collateral management function

Collateral catalog - mandatory elementsStandardization of the collateral workflow - records and updating - data requirements and responsibilities, interaction with rating within the credit approval process, reportingResponsibilities of the collateral management function - schedule of key activities, interaction with other organizational units in relation to the credit risk control and managementNecessary competences of key employees

MODULE IV Changes of the regulatory standard and credit risk control and management system

Topic Subtopic

Placement classification and

credit loss provisions (from IAS 39 to national

standards)

Basic principles of credit loss provision:a) Suffered loss and objective evidence of value reductionb) Individual and portfolio provision basisc) Collaterals and credit loss provisionsThe issue of heterogeneousness of accounting rules on the internationallevelNational specifics – important element of the valid Classification Decision

Capital adequacy

Risk-based capital adequacy concept: Evolution of the capitalrequirements directed by the Basel Committee on Banking SupervisionCredit VaR in the post-crisis bankingCredit risk in the first and in the second pillar - regulatory and internal capital adequacySTD banks: RWA and collateral management

IRB banks: RWA and LGD optimizationCredit risks outside the banking book - SEE relevanceRegulatory context:a) Effect of the regulations to the consolidation processes in bankingb) local specifics

Interaction between the

business and regulatory aspect

in the credit process evolution

The necessary level of knowledge of the regulatory standard elements insales segmentsTop-down approach: Credit policy and credit risk management policy – specification of risk and return trade-offs and their implementation in the sales networkOverall credit portfolio management - the importance of understandingthe overall bank positionManaging the portfolio with the increased credit riskIntroduction to the risk-based credit product management

MODULE V Optimization of the collection strategy and process Topic Subtopic

Optimization of the collection strategy

Collection goals and flexible collection process requirement:a) From the credit risk management strategy, over the creditingpolicy to accounts receivablesb) Analysis of practice, primary tasks and goals per each of the

phasesc) Influence of collection to the credit provisions and capital requirements of an institutionOptimization of the accounts receivables strategy considering the current economic, market and business context

Collection as a segment of the standardized

credit process

Credit process flow chartOrganization of the credit business aiming at the prevention of the possibleconflict of interest

Standardized collection process: Soft collection Work-out and Litigation

Prerequisites of a successfulcollection

Data infrastructure – a balance between the possibilities and requirements of an institutionInternal reporting system – credit portfolio supervision(credit monitoring) and watch listsEarly detection of the credit risk increase ("early-warning" system)Collateral management – from the adequacy assessment to documenting tasks

Optimization of the collection process

Gap analysis – analysis of the current condition (differences between the procedure and practice), definition of "bottle necks", Segmentation of a delinquent portfolioa) Prioritization of the collection activities and selection of the most suitable collection approachb) Had-facts and soft-facts criteria as triggers of individualcollection activitiesInfluence of changes introduced by the new (local and international)regulatory standard to the collection process and activities per phasesProcess optimization through its each phase - how to select the adequate treatment of each client/debtor and initiate the appropriate collection action within each of the collection phasesa) Bank specifics – big and small banksb) Legal affairs in the collection process - a changed role of the

bank

Specifics of the collection and optimization process in the SME/corporatesegment:a) Modeling restrictions in SME and corporate collection at the time ofcrisisb) Restructuring, refinancing and write-offs - how to identify uncollectible accounts receivable and clients with a rehabilitation potentialc) Externalization of collection, compensation schemes and law Specifics of the process and optimization in the retail segment:a) Reaches and limits of the automated collectionb) Identification of the potential candidates for refinancing/

restructuring, externalized collection of the uncollectible accounts receivables

Other key aspectsof the optimized

collection

Data and technology support to collection – from passive reports to automated parts of collection and active collection software• Circulation and archiving of credit files• Internal orders, reminders and automation limits

Key competences of bank collectors:– Skills and knowledge required for collection in the case of a

prolonged crisis– Competence specifics related to different portfoliosegments (retail vs. SME/corporate)Optimum organizational support to the overall collection process

MODULE VI Restructuring of the placement and debtor rehabilitationTopic Subtopic

Terms andexpressions

Business and distressed reprogramming of accounts receivablesAccounts receivables and business restructuringRehabilitation of debtorsRegulator-preferred terminology – provision treatmentof different types of financial reprogramming

Restructuring anticipation

Business cycle and working capital cycleData requirements , analysis of the relevant financial indicatorsCredit portfolio rating dynamicsFrom the financial statement analysis to the collection of required datain the fieldEWS and restructuring anticipation – how to start with the restructuringin time

Financial aspect of the business restructuring

Analysis of key business processes – understanding the occurrence of the financial dataProposals for the balance sheet harmonizationRestructuring of the profit and loss statement

Manager aspect of the

restructuring

The importance of dialog with all stake holdersRelationship banking, accounts receivables and setting the optimum involvement into the restructuring of the clients' business

Optimum structure of the accounts

receivables restructuring

Potentials of the primary and secondary collection sourcesFrom the business plan control to the active assistance in production of the plan for the future periodEfficient supervision of the dedicated spending

Restructuring reality in SEE

Lessons learned from the bankruptcy agreements in the Republic of Croatia initiated so farMore stringent credit standards and success of restructuring in the current market and economic contextFrom transformation of a part of the debt into shares to the accounts receivables write-off

Rehabilitation ofdebtors

Evolution of the client ratingChanges of capital weights and dynamics of releaseof the provisionsOptimum organizational support to the debtor rehabilitation

MODULE VII Quantitative credit scoring models in the retail segment

Topic Subtopic

Model development

Two models (application scoring and behavioral scoring)Variables (statistic and business classification of the candidatevariables)Preparation of data (from cleaning and filtering to the modeling sample preparation)Theoretically available and practically tested modeling methods (from decision trees and neural networks to the logistic regression and score cards)Selection of variables (different measures of predictive candidate variables)Statistic performance measures (from discriminatory strength to the overall model accuracy)

Model calibration

Product and client-based modelsSetting the cut-off score (from the statistic background to finding the balance between the protection and result)Combining of the application and behavioral components (how to reachthe total credit score)Credit ratings in the retail segment

Initial model validation

Data validationQuantitative validation

Qualitative validation

Implementation of the model in

the credit decision making

Credit approval work flow (key elements)Credit scoring models and credit requirement processing system (APS)Technical and user testing of the approval system

Subsequent model validation and

model performance management

Back-testing, out-of-time validation and champion-challenger method

Life cycle of the credit quality model in the retail segment

MODULE VIII Credit rating models in the SME/corporate segment

Topic Subtopic

Model development and calibration

Typical model components in SME/corporate segment (financial score card, soft facts correction, behavioral model correction)Variables (classification per method of origin and financial classification of the candidate variables)Preparation of data (calculation of the financial indicators and the initialexplorative analysis, modeling sample creation)Model development (selection of variables – a balance between statistical measuresand economic significance)Rating model calibration (from the financial score to the final rating)

Initial model validation

Data, quantitative and qualitative validationSpecifics of all validation types in the SME/corporate segment

Implementation of the model in

the credit decision making

process

Key elements of the credit approval workflow – specifics of the SME/corporate segmentHow and when implement the soft-fact correction into the standardizeddetermining of the SME/corporate client solvencyLimits of the credit decision making process standardization in the domain of legal entities

Internal measures of the clients' solvency and the system for processing of the credit request by legal entities

Subsequent model validation

and managing the model

performance

Technical and user testing of the credit decision making system

Back-testing, out-of-time validation and champion-challenger methodGuidelines for managing the models in the SME/Corporate segment

MODULE IX Loss given default models(LGD modeling)

Topic Subtopic

LGD definition and use

Recovery risk as a component of the overall credit riskEconomic loss concept and LGD definitionAreas of LGD implementation; view of LGD from the capital adequacy and credit portfolio valuation perspectiveBasel II-III and minimum regulatory requirements related to LGD specification (recovery risk factors, minimum data time span, LGD per exposure, downturn LGD, guarantee effect)

LGD significance and methodsof calculation

The main components of the economic loss according to Basel IIEconomic loss and residual value of the defaultaccounts receivablesModel components ex-ante LGD (what is and what is not a part of the model)

Introduction to the different methods of LGD calculation:a) Heuristic and quantitative methodsb) Explicit and implicit methodsc) Market method, work-out methodd) Market-implied and historically-implied LGD

e) Top-down and bottom-up (direct method)f) Selection of the most suitable model in relation to the properties of the observed section of the portfolio

Development of a direct method for calculation of ex-

post LGD

Ex-post LGD and ex-ante LGDAnalysis of the bank work-out processesMethodology specification (post-default scenario, economic loss components...)Standard steps (stages) of the LGD model project development and implementationRelevant data for ex-post LGD calculationInclusion of data on unfinished work-out casesCollateralized and non-collateralized parts of exposure; CollateralRecovery Rate (CRR) and Redemption Recover Rate (RRR)Frequent model assumptionsSetting the cost value on the placement level:a) Direct and indirect costsb) Internal and external costsDiscount rate selectionRecognition of the economic recession and downturn LGDConservative margin in calculating LGD by means of a direct method; conservative measures/intervals

Development of ex-ante LGD model

Three steps in the direct ex-ante LGDSegmentation approach and LGD scoringMethodology: Multi-version analysis and regression modelsExplanatory variables (risk factors)Issues related to determining the ex-post LGD by a direct method; a simple task from the mathematics perspective, but rather difficult from the aspect of IT and practice

LGD score calibration based on the ex-post LGD assessment

MODULE X Managing the credit loss reserves TopicSubtopic

Credit risk management terminology

Loan loss reserves (value corrections) and credit loss provisionsDistribution of loss as a theoretical basis of the regulatory perspective of the capital investments and loan loss reservesProgressive and regressive view of the loss: expected(and unexpected) loss and suffered loss

Evolution of perspectives of

loan loss reserves

Reasons of introductionLLR definitionHistorical concept of the LLR development and LLR adequacyDevelopment of international LLR-related standards

Loan loss reserves within the

IAS39/IFRS7 framework

Unchanged GAAP principlesIASB assets segmentation (TB, AfS, HtM, L&R)The notion and identification of the placement impairment; objective evidence of impairment (OEoI)

2 subgroups of L&R assets segment: Individually significant assets (big credits) and individually insignificant assets (small 2 types of loan loss reserves: on the individual level (I-LLP) and on the portfolio level (P-LLP)Loss trigger events on the portfolio and accounts receivables levelOff-balance sheet items and use of CCF

Valuation of the individually significant exposures:a) Calculation of the recoverable amount based on the DCF method

by means of EIRb) collateral value assessment at the time of realization

(expected duration of realization, expected variability of the collateral value assessment, collection cost assessment)c) DCF method back-testingRefinancing and restructuring and reduced placement value

Discount amortizationGroup assessment of the value reduction:a) Groups of financial assets with similar credit riskcharacteristics

b) Asset group OEoIc) Group assessment based on the quantitative methods (flow rate model and transition matrix model)IBNR: Group assessment for latent (incurred, but not reported) losses in the performing part of the portfolioManaging the loan loss reserves by means of IRBcredit risk parameters:a) LIP factor and vintage analysisb) Need for another validationPlacement classificationa) Interaction between the local regulation and IAS39 standardb) Specifics of the effective Decision on the classification of placements andoff-balance sheet liabilitiesDocumentation of the relevant processes and liability specificationsCollaterals and credit loss provisions managementa) Definition of the acceptable insurance instrumentsb) Specification of guidelines of the collateral cash-flow

assessmentInteraction between

the regulatory standard related to

the capital adequacyIASB and BCBS different goals and mandates

and the international accounting

standards related to the valuation of the

asset items

IAS39 and Basel II - similarities and differences

Convergence of views of the prudential and accountingstandards:a) Spanish (dynamic) model of loan loss reservesb) FSF and IASB adherence: influence of the crisis on the international financial regulations and countercyclical capital buffer within Basel IIIc) IFRS9 vs. IFRS7; return of the expected lossIFRS9 (conceptual introduction): Continuation of the standard development or paradigm shift

MODULE XI Capital adequacy and credit risk strategicmanagement

Topic Subtopic

Capital components

Terminology: balance sheet, regulatory and internal capitalEvolution of the banking capital perception

Capital adequacy and evolution of the international

prudential regulations

Basel I:a) Basic ideas introduced by the first Basel Capital Agreement(exposure classes, RWA and RegCap)b) Basel I and introduction of the internal VaR-based modelsc) Loss distribution and prudential specified function of the regulatory capitald) Advantages and disadvantages of Basel I

Basel II:a) Three-pillar structure of the agreementb) Two approaches to the capital adequacy calculation (regulatory weights vs. internal models) within the first pillar: description of the capital requirement structure for the credit risk according to the STD and IRB approachc) The main ideas introduced by the second Basel agreement (default, additional granulation of the exposure classes, regulatory capital transitions, additional limitations to the internal RegCap structure, the Vasicek Distribution as a theoretical basis for the supervisory formula for CapReq calculation)d) Credit protection and (strictly defined) rules for collateral recognitione) Advantages and disadvantages of Basel IIBasel III:a) Change of the regulatory capital structureb) Change of the minimum capital adequacy ratioc) Buffers: limitation of the capital standard procyclicality, higher demands for the system-significant institutionsd) Improved capital regime for TB positions and derivative securitization tasks (IRC, CVA)e) Leverage ratio: protection against the identified restrictions of the risk-based capital measuresReview of Basel III:a) Did Basel III met its goals?b) Basel III and banking in CEE/SEE

Implementation of Basel III

capital standard within EU

Lamfalussy's three-level process and CRD IV packageThe role of EBA and national supervisors (CNB)Structure of CRD IV Directive (2013/36/EU) in the capitaladequacy domain related to the exposure of business to the credit riskStructure of CRR Directive (EU/575/201) in the capitaladequacy domain related to the exposure of business to the credit riskThe purpose of the EBA binding (regulatory and implementation)technical standards (RTS and ITS)

Time schedule of the implementation of specific Basel III standard components

MODULE XII Financial statement analysisTopic Subtopic

Introduction to the financial

statement analysis

Scope and purpose of the financial analysisSources of the analysis informationBasic financial statementsThe initial reading of the financial statement

Basic method of the financial analysis

Analysis techniques: horizontal, vertical and trend analysisAbsolute changes and percentage changesAnalysis of financial indicatorsDuPont's system of company business analysisAltman's Z-score method of predicting the success of the company's business operationAnalysis of competitionCalculation of depreciation

Accounting manipulation in financial reports

Elimination of influence of different accounting policies

Comparison of which statement positions reveals manipulations

Analysis of the financial and business risks

Company cash cycleOperational and financial leverThe company's credit riskThe company's currency risk

Companyvaluation

Corporate financeWhose money does the company spend?

Different company assessment methods (property, profit, cash flow...)Financial planningUse of discounted cash flows in assessing the value and cost effectiveness of a project (time value of money, net present value (NPV), internal return rate (IRR)Determining the company value (DDM and DCF method)

Economic analysis

Economic profitability i.e. added value and returnon invested capitalCost calculation and size of the invested capitalEconomic value of the companyManaging results and financial statements

MODULE XIII Market risk managementTopic Subtopic

Introduction to market risks

General definition of risksWhy market risks need to be managed?Introduction to the market risk dynamics and measuresManaging risks on the cash market

Market riskcategories

Exchange rate riskInterest rate riskShare price riskCommodity riskBanking book interest rate risk

Market risk management and control

Risk management and control in forexRisk management and control on the cash marketRisk management and control in dealing with sharesRisk management and control in dealing with bonds

Risk management and control in dealing with derivative financial instruments

Market risk management

approach within the organization

Organizational structure, corporate governance and risk cultureInfluence of diversification to portfolioDetermining risk appetiteInteraction of the credit, liquidity and market risk and the relevantlimitsLimits and control processes, i.e. organization of the limit monitoring process and market risk position, and daily P&L

Methods of marketrisk measurement

Volatility measures and rate of changeValue at risk (VAR)Testing of stress resistance

Regulatory requirements

Basel III – Capital adequacy in relation to the market risk exposure; changes in comparison to Basel II, application of capital ratios in the risk control and management system, effect on the regular business operationsStandard and internal approach – statistic modeling in the background of Basel III ratio

MODULE XIV Liquidity risk management Topic Subtopic

Introduction to liquidity risk

Definition of the liquidity riskTwo sides to the liquidity risk – financing liquidity risk andmarket liquidity risk

Approach to the liquidity risk within

the risk

Liquidity and liquidity risk management – the trend of liquidity management decentralization and liquidity risk centralization

control and management system on the

Roles and responsibilities in development of the liquidity risk management strategies and policies

Liquidity risk management and

control

Assessment, measurement and monitoring the financing requirementsAssessment of the financing possibilitiesMeasurement and monitoring of liquid assetsCriteria of risk liquidity and liquidity limitsInteraction of the credit, liquidity and market risk and the relevantlimitsPrinciples of good liquidity risk management and control

Regulatory requirements

Evolution of the liquidity standards and ratios, as well as general principles ofthe liquidity risk management within the regulatory standardTwo kinds of liquidity risk measures - Stock and Flow approachLiquidity Coverage Ratio (LCR) – understanding, calculation, monitoring and reportingNet Stable Funding Ratio (NSFR) – understanding,calculation, monitoring and reportingStress resistance testing and ILAAP – from testing the parameter sensibility, over the scenario analysis and reverse stress testing to the definition of the liquidity risk appetite

MODULE XV Operational risk management Topic Subtopic

Introduction to operational risks

What is an operational risk?Operational risk management frameworkBasic risks, their interconnection and interrelation with the operationalriskOperational risk recognition and classification according to business type and line

Operational risk capital requirement

Recognition of the operational risk

sources

Type of the market on which the organization operatesIT systemRegulatory requirementsRisks hidden in complex financial products

Operational risk management

Business processes as a basis for the operational risk management andbusiness improvementInternal control system in the context of the operational risk managementCollection of losses related to the operational riskInterconnection of the control functions (risk management, compliance, internal audit) – Three Lines of Defense modelThe importance of introducing all employees to the effect of the operational risk to businessand importance of employees' understanding of such effectsOperational risk and business continuity management

Methods of measuring the operational risk

Mapping of differences and Key Risk Indicators (KRI)Risk control self-assessment (RCSA) i theory and practiceScenario analysis in theory and practiceReporting on incidents and their proper interpretationRecognize what should and should not be tested(measured)

Regulatory requirements

The importance and position of the operational risk in the context of BASEL II and Basel IIIOperational risk management process in accordance with ISO 31000

MODULE XVI BASEL IIITopic Subtopic

Development of Base from Basel I to Basel III

standard Basel III as revised Basel IIStandardize approach (calculation of the credit-risk weightedassets)Internal ratings-based approach (IRB)

New regulatory requirements

Changes in the segment of new liquidity standardsLiquidity Coverage Ratio - LCRNet Stable Funding Ratio - NSFR

Internal capital adequacy assessment process - ICAAP evolutionInternal measures of the solvency adequacy ration and ILAAP

Bank capital

Changes in bank capitalEvolution of the concept and capital adequacy ratio from Basel I to Basel III:a) Capital conservation bufferb) Countercyclical capital bufferc) System risk capital requirementd) System bank treatment (from the global to the local level)e) Marginal financial leverage ratioExpected and unexpected loss as a function of the main credit risk parameters - PD, LGD, EaD and CCF

a) Capital requirement calculation – standardize and IRB approach (internal rating concept and structure)

Influence of the changed capital norm to ICAAP and capital planning

[Contact]

Feel free to contact us

Address: Huzjanova 20, 10.090 Zagreb, Croatia E-mail: info@Op2M.eu

zjurak@Op2M.eu Tel: +385 (0)1 34 57 053Mob: +385 98 47 00 35Web: http://www.Op2M.eu

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