Course programme - 2 & 3 November 2016
Registration on day one will commence from 08.30, with the first session starting at 09.00, and each day closing at 17.00. Across the two day programme attendees will be delivered tuition by Dr Simon Ashby across the following topic areas:
Risk Appetite Basics
The term risk appetite may appear to be a simple one, but it is often misunderstood. The purpose of this session is to cut through all the confusion, to help delegates arrive at a suitable definition for their institution. Concepts such as risk tolerance and risk bearing capacity will also be discussed.
- An analysis of common definitions of risk appetite, including regulatory definitions.
- The difference between risk appetite, risk tolerance and risk bearing capacity.
- Limit based definitions versus those which consider both risk and return.
- Arriving at a usable definition for your own institution.
Making Effective use of Risk Appetite
The concept of risk appetite can be used for more that just determining acceptable or unacceptable risks. This session will explore the role of risk appetite within financial institutions, focusing in particular on the strategic role of the concept.
- Using risk appetite to support strategy setting and risk management.
- The link between risk appetite and corporate governance.
- How risk appetite can maximise the value of your institution to its stakeholders.
Methods for Expressing Risk Appetite
There is no one right way to express your appetite for risk. This session will explore some of the common ways that can be used to express appetite, including their strengths and weaknesses.
- Common methods for expressing risk appetite.
- Making use of quantitative and qualitative methods of expression.
- The limits of VaR based methods of expression
- Regulatory considerations.
Deciding your appetite for risk
Determining your appetite for risk is never easy. In this session we will explore some of the key factors that you need to consider.
- Whose appetite counts? Considering the needs of different stakeholder groups.
- Other factors to consider (financial, regulatory, etc.).
- Comparing ‘top-down' vs. ‘bottom up' approaches to determining appetite.
- Avoiding some potential pitfalls.
Embedding your Risk Appetite Framework
Well-designed risk appetite frameworks may prove ineffective if they are not properly implemented. In this session we will explore the key issues to consider.
- The importance of communicating your risk appetite statement to all relevant stakeholder groups and decision makers.
- Reflecting risk appetite within your institution's policies, procedures and processes.
- Using risk appetite to support risk reporting and control.
- The link between risk culture and risk appetite.
Regulations and Standards
The PRA/FCA Handbooks as well as EU and international regulations make various references to the concept of risk appetite. In addition there are a growing number of risk appetite standards and white papers - which are worth your time and attention?
- Key regulatory requirements and expectations on risk appetite
- The developing area of risk appetite standards: which are worthy of your attention?
- Further reading and research