Operational Risk Management And Modeling


The objective of risk management is to add maximum sustainable value to the activities of an organisation. It therefore needs to be a continuous and developing process that operates in conjunction with the development and implementation of the organisation’s strategy and whose aim is to increase the probability of achieving the overall objectives of the organisation and reduce the probability of failure. To achieve this, operational risk management must be integrated into the organisation and led by the most senior management.


On successful completion of the program, you would be awarded the professional certification in “OPERATIONAL RISK MANAGEMENT, MODELING AND REGULATIONS” by Moody’s Analytics and EduEdgePro.


On successful completion of the program, you would be awarded the professional certification in "CREDIT RISK MANAGEMENT, MODELING AND REGULATIONS" by Moody's Analytics and EduEdgePro.


  • Operational Frameworks for identifying and quantifying operational risk
  • Excel models to calculate Operational Value-at-Risk
  • Regulatory capital calculators for Operational Risk
  • Exhaustive reading material covering the detailed sections outlined below
  • Practical hands-on Risk Modeling and Analytics useful for careers in Operational Risk Management


  • Identify the sources of operational risk and how these arise within the context of financial institutions main business activities.
  • Understand the governance structures, systems, procedures and cultural aspects necessary for an organisation to successfully manage operational risk.
  • Build a knowledge of the main techniques for the measurement and quantification of operational risk and their relative merits and drawbacks.
  • Appreciate the approaches available to a bank under Basel III for the calculation of regulatory capital for operational risk and the supervisory requirements for each approach.


This course is aimed at those who wish to explore the more advanced aspects of Operational Risk Management to build a career in the below areas:
  • Commercial Banking and Treasury
  • Risk Consulting
  • Global Markets and Risk
  • Regulatory Capital Management
  • Model Validation
  • Quantitative Research

Fast Facts

  • Certified by : Moody’s Analytics and EduEdgePro
  • Broad Coverage:
  • Foundations of Operational Risk
  • Identifying categories of operational risk in financial institutions
  • Operational Risk Governance
  • Understanding the firm’s operational risk profile
  • General Operational Risk Management Techniques:
  • Specialist Operational Risk Management Areas
  • Quantifying Operational risk
  • Operational Risk VaR Measurement
  • Operational Risk Measurement – Regulatory Capital
  • The Advanced Management Approach
  • Mitigation of residual operational risks
  • Building an operational risk management culture


    The aim of this section is to understand the nature of operational risk, identify typical occurrences of operational risk within a bank’s business model, and to consider external perspectives on the importance of operational risk management in rating and banking supervision. This section also looks at the key role of the board in setting an organisation’s operational risk policy and the key characteristics of how it is implemented.

    Introduction to Operational Risk
    • Importance of Operational Risk as part of the firms risk inventory
    • Understanding the nature of operational risk
    • Current industry drivers of increasing operational risk in financial institution, complexity, innovation, technology, transaction velocity and litigation
    • Motivations to manage operational risk: financial loss, legal and regulatory requirements, reputational risks, capital management and planning
    • Management perspectives/requirements; understanding the risk, information systems, quantification, mitigation and hedging decisions, cultural and behavioural aspects
    Identifying categories of operational risk in financial institutions
    • Core operational capacity
    • People risks
    • Client relationships & Fiduciary
    • Transactional systems
    • Safe custody
    • Reconciliation and reporting
    • Fraud
    • Legal risk
    • Change and new activities
    • Expense volatility

    Operational Risk Governance

    IKey areas
    • Risk management process – Operational risk as an integral part of the enterprise risk management framework
    • Operational risk policy – the key components of an organisation’s risk policy.
    • Roles and responsibilities - of the board, senior management and support functions
    • Evaluating corporate governance standards
    • Operational risk framework – how the components of operational risk management fit within strategy and risk policy.
    • Operational risk cycle – the components of the risk cycle: identification; assessment and measurement; mitigation and management; monitoring and reporting.

    The objective of this section is to consider the main techniques used to identify and to manage operational risks, within a financial institution environment.

    Understanding the firm’s operational risk profile
    • Objectives of operational risk management
    • Risk profiling
    • Risk control and self-assessment analysis
    • Key risk indicator analysis
    General Operational Risk Management Techniques
    • Internal data collection, parsing and emerging risks identification
    • Use of external event data
    • “Lessons Learned” processes
    • Scenario analysis techniques
    • Impact of new products, processes, business lines & locations
    Specialist Operational Risk Management Areas
    • Objectives and good practice in the management of Legal Risk
    • Fraud and Anti-Money Laundering requirements
    • Business Continuity Risk
    • IT Infrastructure Risk

    The aim of this section is to explore the main techniques which are applied with the financial services industry to quantify operational risk, their relative strengths and weaknesses, and also to consider the problem of “unquantifiable” aspects to operational risk measurement.

    Quantifying Operational risk
    • Steps involved in quantifying risks
    • Approaches to measuring operational risk; expense-based, income volatility, top-down and bottom-up modelling approaches.
    • Operational risk databases
    • Measurement Techniques - Probability & impact matrices.
    • Scoring risk impacts
    • Determining loss distribution
    • Aggregating operational risk
    Operational Risk VaR Measurement
    • Calculating unexpected versus expected loss
    • Operational VaR models

    This section aims to demonstrate how the management and measurement techniques explored in the previous sections are applied by the Basel II and III capital accords.

    Regulatory Charges for Operational Risk
    • Capital charge and RWA under Operational Risk
    • Fundamental Basel approaches for operational risk capital requirements
    • The Basic Indicator Approach
    • The Standardised and Alternative Standardised Approach
    • The Advanced Management Approach (AMA)
    • Regulatory criteria for adoption of Standardised and AMA approaches
    • Pillar 2 and Pillar 3 requirements for operational risk
    The Advanced Management Approach
    • Classification of risks under the AMA
    • Qualitative risk management standards
    • Quantitative system and data standards
    • Typical methodologies and system architectures employed under the AMA

    The final section explores the various techniques and methodologies that could be used to mitigate Operations risks.

    Mitigation of residual operational risks
    • Outsourcing: typical outsourced operations, gains and losses in terms of organisational risk profile
    • Mitigation choices: the “ATAC” matrix
    • Insurance as a mitigant to operational risk
    Building an operational risk management culture
    • Understanding what causes poor risk management cultures
    • Changing culture to take account of operational risk



    Let us bring our classes to you! Our in-house training are ideal for groups of 10 or more people. We can provide Off-the-shelf training in the form of our classic courses, or we can provide bespoke training, tailored to your organisational goals and objectives. Please contact us for further details.