Banking Risk Management Course

Lesson 1 • Taxonomy of Banking Risks

Surveys the major risk categories banks face, from credit to operational. Provides a shared vocabulary used throughout the course.

Lesson 2 • The Nature of Risk in Banking

Defines risk and uncertainty as they apply to financial institutions. Connects the concept of risk to bank solvency, profitability, and stakeholder trust.

Lesson 3 • The Risk Management Framework

Introduces the three-lines-of-defence model and enterprise risk management structure. Shows how governance, oversight, and execution roles are distributed.

Lesson 1 • Collateral and Credit Enhancements

Examines collateral valuation, guarantees, and other credit risk mitigants. Shows how enhancements reduce effective exposure and affect capital requirements.

Lesson 2 • Credit Scoring and Rating Systems

Explains internal and external rating methodologies and statistical scoring models. Connects rating outputs to risk-based pricing and approval decisions.

Lesson 3 • Borrower Creditworthiness Analysis

Covers qualitative and financial statement analysis for individual and corporate borrowers. Develops judgment for assessing repayment capacity and financial health.

Lesson 4 • Portfolio Credit Risk Concepts

Extends single-borrower analysis to portfolio-level concentration and correlation effects. Introduces diversification principles and portfolio loss distributions.

Lesson 1 • Stress Testing Credit Portfolios

Covers scenario design and sensitivity analysis for credit portfolios under adverse conditions. Prepares students to interpret and act on stress test results.

Lesson 2 • Credit Value at Risk

Introduces Credit VaR as a portfolio-level risk measure capturing tail loss. Connects Credit VaR to economic capital allocation decisions.

Lesson 3 • Model Validation and Backtesting

Establishes standards for validating credit models and testing their predictive accuracy. Reinforces the importance of ongoing model governance.

Lesson 1 • Sensitivity Measures and Greeks

Covers delta, gamma, vega, and duration as tools for measuring price sensitivity. Connects sensitivity measures to position-level risk monitoring.

Lesson 2 • Expected Shortfall and Tail Risk

Introduces Expected Shortfall as a coherent risk measure beyond VaR. Addresses tail risk and its implications for capital and risk limits.

Lesson 3 • Market Risk Sources and Instruments

Identifies interest rate, equity, foreign exchange, and commodity risk drivers. Maps risk sources to specific financial instruments held by banks.

Lesson 4 • Hedging Market Risk Exposures

Covers hedging strategies using derivatives including swaps, futures, and options. Evaluates hedge effectiveness and residual basis risk.

Lesson 1 • Liquidity Buffer and Asset Management

Covers the composition and sizing of high-quality liquid asset buffers. Addresses the trade-off between liquidity safety and yield drag.

Lesson 2 • Funds Transfer Pricing

Explains how internal funds transfer pricing allocates liquidity costs across business lines. Links FTP to incentive alignment and balance sheet management.

Lesson 3 • Contingency Funding Planning

Guides the design of contingency funding plans for stress scenarios. Prepares students to activate emergency liquidity measures effectively.

Lesson 4 • Liquidity Risk Concepts and Sources

Distinguishes funding liquidity from market liquidity and identifies their key drivers. Establishes why liquidity risk can trigger rapid bank failure.

Lesson 1 • Control Environment and Mitigation

Examines preventive and detective controls, insurance, and process redesign as mitigants. Links control effectiveness to residual risk and capital relief.

Lesson 2 • Operational Risk Framework Design

Defines operational risk and establishes the components of a sound management framework. Connects framework design to regulatory expectations and loss prevention.

Lesson 3 • Operational Risk Measurement Approaches

Explains the basic indicator, standardised, and advanced measurement approaches. Evaluates the capital implications of each measurement method.

Lesson 4 • Loss Data Collection and Analysis

Covers internal and external loss data collection, categorisation, and trend analysis. Uses loss data to calibrate risk assessments and capital models.

Lesson 1 • Leverage Ratio and Capital Buffers

Explains the leverage ratio as a non-risk-based backstop and the role of systemic buffers. Addresses how buffers interact with minimum capital requirements.

Lesson 2 • Risk-Weighted Asset Calculation

Covers standardised and internal ratings-based approaches for computing risk-weighted assets. Demonstrates how asset quality and collateral affect capital charges.

Lesson 3 • Regulatory Capital Framework

Explains the structure of minimum capital requirements across Pillar 1, 2, and 3. Connects capital buffers to macroprudential and microprudential objectives.

Lesson 4 • Capital Allocation and Performance

Covers risk-adjusted return on capital and capital allocation across business lines. Connects capital efficiency to strategic resource allocation decisions.

Lesson 1 • Strategic Risk and Business Model Risk

Identifies risks arising from flawed strategy, competitive disruption, and business model obsolescence. Develops forward-looking risk identification skills.

Lesson 2 • Risk Aggregation and Concentration

Addresses methods for aggregating risks across categories and identifying firm-wide concentrations. Prepares students to manage correlated risk exposures holistically.

Lesson 3 • Risk Reporting and Board Communication

Covers the design of risk reports for senior management and board audiences. Emphasises clarity, materiality, and actionable insight in risk communication.

Lesson 4 • Risk Appetite Framework Design

Covers the construction of risk appetite statements, metrics, and escalation triggers. Links appetite to board-approved strategy and business planning cycles.

Lesson 5 • Risk Culture and Governance

Examines how risk culture shapes behaviour and how governance structures enforce accountability. Connects culture to risk management effectiveness and regulatory expectations.