Course Title: The New Basel Capital Accord (Basel II) - Implementation and Compliance Training

The seminar has been designed to provide with the knowledge and skills needed to understand and support Basel II compliance.

Target Audience:
This course is intended for managers and professionals from Banks, Financial Institutions, Multinational Corporations, Supervisory Agencies.

This course is recommended for all professionals who need to understand and speak the specialized language of Basel compliance, which must become the common language throughout their organization.

This course is highly recommended for:
• C – Level Executives and Boards of Directors
• IT and Information Security Directors, Managers and Professionals
• Chief Risk and Compliance Officers
• IT and Security Process Owners
• Network, System and Security Administrators
• IT Auditors
• IT, Security and Management Consultants

3 Days, 09:00 to 17:00. The third day from 17:15 to 19:00hrs we will discuss your issues and questions.

Course Synopsis:

• The Bank for International Settlements (BIS)
• The Basel Committee on Banking Supervision
• From the Young Plan (1930) to Basel II
• Regulatory supervision of internationally active banks
• The failure of the Bankhaus Herstatt and the crisis of confidence

• First Basel Capital Accord
• Formulating broad supervisory standards and guidelines
• Regulatory and economic capital
• Important objectives
• 1980s: The capital ratios of the main international banks are deteriorating
• Credit Risk
• Assets are weighted by factors
• On-balance sheet engagements
• Off-balance sheet engagements
• Examples of capital requirements
• December 1987: The Basel Capital Accord approved by the G10
• Basel I amendments

• The New Basel Capital Accord (Basel II)
• Realigning the regulation with the economic realities of the global banking markets
• New capital adequacy framework replaces the 1988 Accord
• Improving risk and asset management to avoid financial disasters
• "Sufficient assets" to offset risks
• The technical challenges for both banks and supervisors
• How much capital is necessary to serve as a sufficient buffer?
• The three-pillar regulatory structure
• Purposes of Basel II
• Scope of the application
• Pillar 1: Minimum capital requirements
• Credit Risk – 3 approaches
• The standardized approach to credit risk
• Claims on sovereigns
• Claims on banks
• Claims on corporates
• The two internal ratings-based (IRB) approaches to credit risk
• Some definitions: PD - The probability of default, LGD - The loss given default, EAD - Exposure at default, M – Maturity
• 5 classes of assets
• Pillar 2: Supervisory review
• Key principles
• Aspects and issues of the supervisory review process
• Pillar 3: Market discipline
• Disclosure requirements
• Qualitative and Quantitative disclosures
• Guiding principles
• Employees Affected
• Effective Dates

• Framework for internal control systems in banking organizations - Basel Committee on Banking Supervision
• The 13 Principles for the Assessment of Internal Control Systems
• The 13 Principles and COSO
• The control environment
• Risk assessment
• Control activities
• Information and communication
• Monitoring
• Types of control breakdowns typically seen in problem bank cases
• The objectives and role of the internal controls framework
• The major elements of an internal control process
• Evaluation of internal control systems by supervisory authorities
• Role and responsibilities of external auditors
• Supervisory lessons learned from internal control failures

• Operational Risk
• What is operational risk
• Legal risk
• Information Technology operational risk
• Operational, operations and operating risk
• The evolving importance of operational risk
• Quantification of operational risk
• Loss categories and business lines
• Operational risk measurement methodologies
• Identification of operational risk
• The Delphi method

• Operational Risk Approaches
• Basic Indicator Approach (BIA)
• Standardized Approach (SA)
• Alternative Standardized Approach (ASA)
• Advanced Measurement Approaches (AMA)
• Internal Measurement Approach (IMA)
• Loss Distribution (LD)
• Standard Normal Distribution
• “Fat Tails” in the normal distribution
• Expected loss (EL), Unexpected Loss (UL)
• Value-at Risk (VaR)
• Value-at Risk and Basel I amendment, 1996
• Value-at Risk and Basel II
• Calculating Value-at Risk
• Monte Carlo simulations
• Monte Carlo limitations
• Extreme Value theory
• Scoreboards
• Stress Testing
• Stress testing and Basel
• (AMA) Advantages / Disadvantages
• Recognition of the firms’ own modelling of operational risk losses
• “Weak banks”, internal and external audit and sound practices for operational risk
• Self assessment
• Key Risk Indicators
• Operational Risk Measurement Issues
• The game theory
• The prisoner’s dilemma – and the connection with operational risk measurement and management
• Operational risk management
• Operational Risk Management Office
• Key functions of Operational Risk Management Office
• Key functions of Operational Risk Managers
• Key functions of Department Heads
• Internal and external audit
• Operational risk sound practices
• Operational risk mitigation
• Insurance to mitigate operational risk

• Third-party service providers and vendors
• Redefining outsourcing
• Outsourcing services and Basel II compliance
• The new definition of outsourcing
• Outsourcing after Basel II
• Offshore outsourcing is also redefined
• Key risks of outsourcing
• What is needed from vendors and service providers

• Basel II and other regulations
• Basel and other regulations
• Governance issues
• Capital Requirements Directive (CRD)
• Markets in Financial Instruments Directive (MiFID)
• What will be the impact of MiFID to EU and non EU banks?
• Aligning Basel II operational risk and Sarbanes-Oxley 404 projects
• Common elements and differences of compliance projects
• New standards
• Disclosure issues
• Multinational companies and compliance challenges

Cost - Fixed fee
In-company Training Courses - Fully tailored training

The total cost for 3 days training is $14,000 for teams from 2 to 30.
Everything is included in this price (expenses, flights, tax etc.). George Lekatis will work on your premises or at a venue of your choice, in the States, in Europe or in Asia.
The total cost for 5 days training is $18,000 for teams from 2 to 30.
Everything is included in this price (expenses, flights, tax etc.). George Lekatis will work on your premises or at a venue of your choice, in the States, in Europe or in Asia.

For open (not in-house) training classes in 23 countries please contact out international training partners ( )