Topics covered
- Basics of Risk Management
- Market risk credit risk and operation risk basic
- RAROC risk adjusted return on capital
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In this reading we will discuss
LEARNING OBJECTIVES
• EXPLAIN THE CONCEPT OF RISK AND COMPARE RISK MANAGEMENT WITH RISK-TAKING.
• DESCRIBE ELEMENTS, OR BUILDING BLOCKS, OF THE RISK MANAGEMENT PROCESS AND IDENTIFY PROBLEMS AND CHALLENGES THAT CAN ARISE IN THE RISK MANAGEMENT PROCESS.
• EVALUATE AND APPLY TOOLS AND PROCEDURES USED TO MEASURE AND MANAGE RISK, INCLUDING QUANTITATIVE MEASURES, QUALITATIVE ASSESSMENT, AND ENTERPRISE RISK MANAGEMENT.
• DISTINGUISH BETWEEN EXPECTED LOSS AND UNEXPECTED LOSS, AND PROVIDE EXAMPLES OF EACH.
• INTERPRET THE RELATIONSHIP BETWEEN RISK AND REWARD AND EXPLAIN HOW CONFLICTS OF INTEREST CAN IMPACT RISK MANAGEMENT.
• DESCRIBE AND DIFFERENTIATE BETWEEN THE KEY CLASSES OF RISKS, EXPLAIN HOW EACH TYPE OF RISK CAN ARISE, AND ASSESS THE POTENTIAL IMPACT OF EACH TYPE OF RISK ON AN ORGANIZATION.
• EXPLAIN HOW RISK FACTORS CAN INTERACT WITH EACH OTHER AND DESCRIBE CHALLENGES IN AGGREGATING RISK EXPOSURES.