Introduction to Risk Management

This course provides a broad overview of how a bank manages risk.

Participants will first identify the different types of risks a bank is exposed to, discussing real life case studies. The course looks in-depth at market risk and the importance of measuring Value-at-Risk (VaR). Participants will then consider operational risk and the case of the London Whale.

Finally, the course examines credit and counterparty risk and how implied default rates are calculated.


For individuals with a working knowledge of how a bank operates and a good understanding of credit markets.

Learning Outcomes

At the end of this course delegates should understand:

  • How to identify the key types of risk and techniques for preventing errors
  • The importance of VaR as well as how it is calculated and measured
  • The key elements of market risk, operational risk and credit risk

Course Content

Basics of Risk Management

  • Types of Risk
  • Risk case studies

Exercises: Identifying and preventing risk

Market Risk & Value-at-Risk (VaR)

  • Normal linear VaR and the normality assumption
  • Interpreting the confidence level
  • Measuring VaR and expected shortfall
  • Backtesting
  • Monte Carlo simulation
  • Stress testing
  • Performance of VaR models prior to the financial crisis

Exercises: Calculating VaR for one or two assets as well as historic simulated VaR

Operational Risk

  • Capital requirements
  • Case study: London Whale

Credit Risk

  • Sources of credit risk
  • Historic and implied default and recovery rates
  • Counterparty Credit Risk
  • Credit Value Adjustments (CVA)
  • Funding collateral calls


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Why study with Alpha?

Innovation and creativity born from experience

We are thought leaders in instructional and learning journey design and holistic solution architects. We have extensive finance and investments experience combined with skills application to deliver performance improving results. We develop immersive learning environments that maximize time to productivity, support talent retention and added value to improving quality of hires.

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We are focused on mining the embedded organisational intellectual capital for the benefit of the next generation. We create and curate best in class practice gathered from our experience with the leading financial institutions. We design our programmes with the end in mind – what results are you trying to achieve with this intervention? What metrics will we set ourselves to achieve that?

Generation Proof

Quality and innovation, using current market and industry best practices, have made us a trusted partner in delivering dynamic and motivating training for the financial and capital markets. Our programmes are generation proof and responsive to evolving learner needs and styles. Our solutions use a multi-stakeholder engagement strategy that expands beyond relationships between the learner and learning provider. We create connections with managers, peers and the wider business to drive impactful return on investment..

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