Bank Risk Management – Practical Framework for Treasury and Finance Professionals

DAY 1 – CORE BANKING RISKS AND RISK FRAMEWORKS

Module 1 – Introduction to Bank Risk Management

• Role of banks in financial markets

• Why risk management matters

• Risk vs return framework

• Three lines of defence model

• Governance and risk culture

• Board, ALCO, Treasury, Front Office, Risk and Compliance functions

Practical Discussion:

• How risk failures emerge in practice

• Examples from major banking crises

Module 2 – Market Risk

• Interest rate risk

• FX risk

• Credit spread risk

• Equity and commodity exposure

• Trading book vs banking book

• Value-at-Risk (VaR)

• Stress testing and scenario analysis

• Limit frameworks

Case Studies:

• 2008 Financial Crisis

• UK Gilt market volatility (2022)

• SVB interest rate risk failure

Workshop:

• Interpreting a simplified trading risk report

Module 3 – Liquidity and Funding Risk

• Liquidity risk fundamentals

• Funding structures in banks

• Asset-liability mismatch

• Central bank liquidity

• Liquidity Coverage Ratio (LCR)

• Net Stable Funding Ratio (NSFR)

Treasury Focus:

• Role of corporate treasury vs bank treasury

• Funding stress scenarios

• Contingency funding plans

Practical Exercise:

• Analysing a simplified liquidity profile

Module 4 – Interest Rate Risk in the Banking Book (IRRBB)

• Repricing risk

• Basis risk

• Yield curve risk

• Economic value vs earnings sensitivity

• Hedging approaches using derivatives

Treasury Perspective:

• Impact on bank profitability

• ALM and balance sheet management

DAY 2 – CREDIT, OPERATIONAL AND ENTERPRISE RISK

Module 5 – Credit Risk

• Types of credit exposure

• Corporate lending risk

• Counterparty risk

• Sovereign risk

• Credit ratings and probability of default

• Collateral and netting

Market Examples:

• Lehman Brothers

• Credit Suisse

• Emerging market sovereign crises

Practical Exercise:

• Basic credit assessment framework

Module 6 – Operational and Non-Financial Risks

• Operational risk definition

• Fraud and control failures

• Cybersecurity and technology risks

• Conduct and reputational risk

• Model risk

• Third-party/vendor risk

Discussion:

• How operational failures become financial crises

Module 7 – Regulatory Framework and Capital

• Basel framework overview

• Capital adequacy concepts

• CET1, leverage ratio

• Stress testing and recovery planning

• Resolution and “Too Big To Fail”

• ESG and climate-related financial risks (overview)

Treasury Relevance:

• Impact of regulation on funding, liquidity, and profitability

Module 8 – Integrated Risk Management and Case Studies

• Enterprise risk management

• Risk appetite frameworks

• Interaction between Treasury, Risk, and Front Office

• Risk reporting and escalation

Final Case Studies:

• Barings

• Northern Rock

• Silicon Valley Bank

• Archegos

Group Discussion:

• “What makes a well-managed bank?”

Training Objectives

By the end of the programme, participants should be able to:

• Understand the major risks faced by banks and financial institutions

• Explain how banks measure, monitor, and manage risk

• Understand the interaction between treasury, trading, finance, and risk functions

• Analyse key market events and risk failures

• Understand the regulatory framework shaping modern bank risk management

• Apply practical concepts to real-world treasury and banking situations

Training Course Summary

This two-day programme provides a practical framework for understanding how banks identify, measure and manage risk. Day one covers core banking risks, market risk, liquidity and funding risk, and interest rate risk in the banking book, supported by real case studies including the 2008 financial crisis, the 2022 UK gilt market volatility, and the SVB failure. Day two turns to credit risk, operational and non-financial risks, and the regulatory and capital framework (Basel, capital adequacy, stress testing), before bringing everything together in an integrated risk management session using real life case studies.

Throughout, the emphasis is on connecting theory to practice: participants work through workshops and exercises based on simplified risk reports and liquidity profiles, and examine how real risk failures unfolded, so they leave with a working understanding of how treasury, trading, finance and risk functions interact in managing a bank's risk profile.