FRM Training Program: Enterprise Risk Management & Future Trends
This session covers the fundamentals of Enterprise Risk Management (ERM), contrasting it with traditional silo-based approaches. Participants will learn about the motivations for adopting ERM, best practices for governance and implementation, and the importance of risk culture. The training also explores scenario analysis in the context of ERM, stress testing, and capital planning. In the second part of this training session we discuss learnings from financial disasters. We analyze the key factors that led to and derive the lessons learned from case studies understanding the most relevant risk factors.
Learning Objectives:
- Describe Enterprise Risk Management (ERM) and compare an ERM program with a traditional silo-based risk management program.
- Describe the motivations for a firm to adopt an ERM initiative.
- Explain best practices for the governance and implementation of an ERM program.
- Describe risk culture, explain the characteristics of a strong corporate risk culture, and describe challenges to the establishment of a strong risk culture at a firm.
- Explain the role of scenario analysis in the implementation of an ERM program and describe its advantages and disadvantages.
- Explain the use of scenario analysis in stress testing programs and capital planning.
- Interest rate risk, including the 1980s savings and loan crisis in the US.
- Funding liquidity risk, including Lehman Brothers, Continental Illinois, and Northern Rock.
- Implementing hedging strategies, including the Metallgesellschaft case.
- Model risk, including the Niederhoffer case, Long Term Capital Management, and the London Whale case.
- Rogue trading and misleading reporting, including the Barings case.
- Financial engineering and complex derivatives, including Bankers Trust, the Orange County case, and Sachsen Landesbank.
- Reputational risk, including the Volkswagen case.
- Corporate governance, including the Enron case.
- Cyber risk, including the SWIFT case.