Operational Risk of OTC Derivatives

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Module I: Defining and Identifying Operational Risk

Case Study

Module II: Life Cycle of a Financial Derivative

Define role of front, middle, and back office
Compare the order of pre-and post-trade activities
Identify confirmation and settlement process
Evaluate whether internal controls are sound
Establish standards for reliability and soundness of back office
Evaluate reconciliation procedures and resolution of disputed trades and discrepancies
Define fraudulent trades and their prevention

Module III: Measuring Operational Risk

Compare and contrast operational risk measurement models used by market practitioners
Identify advantages and risks of operational risk measurement models

Module IV: Controlling Operational Risk

Identify best practices to control operational risk
Compare and contrast advantages and disadvantages to how back offices are set up and run at financial institutions
Discuss how potential new financial regulations will impact the control of operational risk
Case Study

Module IV Influence of Basel III on Operational Risk

Identify qualitative and quantitative requirements for Basel III's operational risk measurement approaches
Basic Indicator Approach
Standardized Approach
Advanced Measurement Approach
Compare and contrast advantages and challenges with these approaches
Discuss potential changes to Basel III and their effect on operational risk

Module V Controlling Operational Risk

Identify best practices to control operational risk
Compare and contrast advantages and disadvantages to how back offices are set up and run at financial institutions
Discuss how potential new financial regulations will impact the control of operational risk

Case Study

Module VI Monitoring Operational Risk

Identify different financial institution personnel who needs to monitor operational risk
Evaluate best practices in monitoring operational risk

Exercise

Summary Conclusion and Question and Answer Session