Welcome, this thread is for professionals and individuals in risk related roles and those interested in risk management.

I will be introducing Risk Management, carry out a free training on this thread and also introduce some professional courses in Risk Management, so kindly follow.

Firstly, before we dive into the concept of Risk Management we must first understand what the term ‘Risk’ entails.

Definitions of risk

The Oxford English Dictionary definition of risk is as follows: ‘a chance or possibility of danger, loss, injury or other adverse consequences’ and the definition of at risk is ‘exposed to danger’. In this context, risk is used to signify negative consequences. However, taking a risk can also result in a positive outcome. A third possibility is that risk is related to uncertainty of outcome.
Take the example of owning a car. For most people, owning a car is an opportunity to become more mobile and gain the related benefits. However, there are uncertainties in owning a car that are related to maintenance and repair costs. Finally, cars can be involved in accidents, so there are obvious negative outcomes that can occur.

The international guide to risk-related definitions is ISO Guide 73 and it defines risk as ‘effect of uncertainty on objectives’. This definition appears to assume a certain level of knowledge about risk management and it is not easy to apply to everyday life.

Aspects of risk
Risk may have positive or negative outcomes or may simply result in uncertainty. Therefore, risks may be considered to be related to an opportunity or a loss or the presence of uncertainty for an organization. Every risk has its own characteristics that require particular management or analysis.
• hazard (or pure) risks;
• control (or uncertainty) risks;
• opportunity (or speculative) risks.

There are certain risk events that can only result in negative outcomes. These risks are hazard risks or pure risks, and these may be thought of as operational or insurable risks. In general, organizations will have a tolerance of hazard risks and these need to be managed within the levels of tolerance of the organization. A good example of a hazard risk faced by many organizations is that of theft.

Impact of hazard risks
Hazard risks undermine objectives, and the level of impact of such risks is a measure of their significance. Risk management has its longest history and earliest origins in the management of hazard risks. Hazard risk management is closely related to the management of insurable risks. Remember that a hazard (or pure) risk can only have a negative outcome.

Hazard risk management is concerned with issues such as health and safety at work, fire prevention, damage to property and the consequences of defective products. Hazard risks can cause disruption to normal operations, as well as resulting in increased costs and poor publicity associated with disruptive events.

Hazard risks are related to business dependencies, including IT and other supporting services. There is increasing dependence on the IT infrastructure of most organizations and IT systems can be disrupted by computer breakdown or fire in server rooms, as well as virus infection and deliberate hacking or computer attacks.

Theft and fraud can also be significant hazard risks for many organizations. This is especially true for organizations handling cash or managing a significant number of financial transactions. Techniques relevant to the avoidance of theft and fraud include adequate security procedures, segregation of financial duties, and authorization and delegation procedures, as well as the vetting of staff prior to employment.

Control risks are risks that cause doubt about the ability to achieve the mission of the organization. Internal financial control protocols are a good example of a response to a control risk. If the control protocols are removed, there is no way of being certain about what will happen. Control risks are the most difficult type of risk to describe.

Control risks are associated with uncertainty, and examples include the potential for legal non-compliance and losses caused by fraud. They are usually dependent on the successful management of people and successful implementation of control protocols. Although most organizations ensure that control risks are carefully managed, they may, nevertheless, remain potentially significant.

Opportunity risks are the risks that are (usually) deliberately sought by the organization. These risks arise because the organization is seeking to enhance the achievement of the mission, although they might inhibit the organization if the outcome is adverse. This is the most important type of risk for the future long-term success of any organization.
Many organizations are willing to invest in high-risk business strategies in anticipation of a high profit or return. These organizations may be considered to have a large appetite for opportunity investment. Often, the same organization will have the opposite approach to hazard risks and have a small hazard tolerance. This may be appropriate, because the attitude of the organization may be that it does not want hazard-related risks consuming corporate resources, when it is putting so much value at risk investing in opportunities.


MAJOR AREAS OF RISK

1. FINANCIAL RISK
2. OPERATIONAL RISK
3. ENTERPRISE RISK/BUSINESS RISK
4. STRATEGIC RISK
5. LEGAL RISK
6. COMPLIANCE AND REGULATORY RISK
7. ENVIRONMENTAL AND HAZARD RISK

Of all the aspects of risk management, Financial Risk is the largest due to the significance of the commercial sector in most countries.

Financial Risk is divided into:
1. Credit Risk/ Credit Risk Management
2. Market Risk/ Market Risk Management
3. Liquidity Risk/ Liquidity Risk Management

All these aspects of financial risk are major disciplines in all financial institutions and government parastatals.
The Financial Risk Management is pivotal to the survival of any financial institution and organization in the world. It entails the structures financial institutions put in place to curtail and protect against risk exposures arising from financial transactions such as loans and credit facilities, cash withdrawals and deposits(banks), financial instruments such as bonds, stocks, futures, swaps, derivatives and equity.

Risk exposures means factors that could lead to financial loss, hence, financial institutions protect themselves against loss arising from financial transactions.
Lehman Brothers Holdings Inc. which was the fourth largest investment bank in the US(behind Goldman Sachs, Morgan Stanley, and Merrill Lynch) before declaring bankruptcy in 2008 due to failed financial risk management system, and this unfortunate event led to the global financial crisis.

“Credit” means a provision of, or commitment to provide, funds or substitutes for funds, to a borrower, including off-balance sheet transactions, customers’ lines of credit, overdrafts, bills purchased and discounted, and finance leases.
“Credit risk” means the risk of credit loss that results from the failure of a borrower to honour the borrower’s credit obligation to the financial institution.
“Financial institution” means any deposit-taking body or person regulated by the Central Bank of Nigeria.

For anyone interested in a course in Credit Risk Management (CRM):

Entrepower Risk Management Academy
Offers a 4day course in Financial Risk Management

Certificate in Credit Risk and Portfolio Management

What is credit risk? Why is it so important, in modern economies, to correctly deal with it? This course combines theory with practice to answer these questions.

About this Course

This course is also available for self study, meaning you can explore this course in a self-paced fashion. Certain features of this course may not be active, but many people enjoy watching the videos and working with the materials. Make sure to check for reruns of this course.
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[b]You are a bank and a big part of your daily business is to lend money. Unfortunately for you, lending money is definitely a risky activity: there is no 100% guarantee that you will get all your money back. For example you may expect losses in your portfolio because of the default of your counterpart. Or, in a less extreme situation, the credit quality of your counterpart may deteriorate according to some rating system, so that your loan becomes more and more risky.
These are typical situations in which credit risk manifests itself. According to the Basel Agreements, credit risk is one of the three fundamental risks, together with market risk and operational risk, a bank (or another regulated financial institution) has to face when operating on the markets. As the 2008 financial crisis has shown us, a correct understanding of credit risk and the ability to cope with it are fundamental in the world of today.
The aim of this course is to provide an introduction to credit risk modeling and hedging. At the end of the course, the students will be able to understand and correctly use the basic tools of credit risk management, both from a theoretical and, most of all, a practical point of view. This will be a quite unconventional course. For every methodology, we will analyze its points of strengths, but we will also stress its points of weakness. We will try to do this in a rigorous way, but also with fun.[/b]

What You Get
»Knowledge: in-depth understanding of credit risk management from the foundations to the most advanced statistical and optimization techniques, in 4 intensive days of theory and live examples and exercises:
• Basel Accord: Basel Accord, Credit Risk, Market Risk, Interactions between Credit and Market Risk
• Statistical Models: VaR (Value at Risk), Stress testing, Scenario Analysis, Monte Carlo
• Risk analysis: Counterparty risk, Diversification, credit exposure limits, definition of related groups of borrowers
• Credit risk management: Credit processing/Appraisal, approval/sanction, documentation, administration and disbursement
• Credit monitoring : Monitoring and control of individual credit and overall portfolio
• Credit recovery: Managing problem credit/Recovery
»Code: full set of case studies;

»Certifications
• Certificate of Attendance - Advanced Credit Risk and Portfolio Management
• Certificate in Advanced Credit Risk and Portfolio Management (upon completion of an optional examination)
»Networking

What You Pay
N 35, 000 per delegate (Fee covers: Study Pack, Tea break and Certificate)

When/Where
November 8th & 9th, 14th &15th 2014, 1:00pm- 5:30pm (Saturdays and Sundays)
Capital Building, 233, Ikorodu Road, Idiroko Bus-stop Maryland, Lagos state.

Audience
»Finance professionals with qualitative and/ or quantitative background:
• Banking professionals, Investment bankers, Insurance professionals, investors, Business owners, financial consultants will learn the latest developments in the field and deepen their knowledge of mainstream approaches
• -Portfolio managers/risk managers
• -Sell-side professionals will bridge the gap to quantitative buy-side finance
» Registration: Call 08183536459, or 07035557114 or send an email to training@therma.org and a registration form will be sent to you.