BANK OPERATIONAL RISK AND GLOBAL OPERATIONS MANAGEMENT

SHE Level 5
SCQF Credit Points 20.00
ECTS Credit Points 10.00
Module Code MMN324015
Module Leader Chioma Nwafor
School Glasgow School for Business and Society
Subject Finance and Accounting
Trimesters
  • B (January start)
  • A (September start)

Pre-Requisite Knowledge

N/A

Summary of Content

This module study the concepts of market and credit risk. This modules addresses the operational risk in depth. Thus, set within the context of the financial services sector, the aim of this module is to provide you with an understanding of the theory of operational risk and global operations management. Through the study of operational risks in global financial institutions, you will critically assess how financial institutions manage these risks and control their operating systems. It will also aim to develop a critical awareness of the global operations of trades that these institutions execute. As a result, the module will also cover analysis of the main operations of banks such as settlement and clearance in both EU and emerging markets, conduct of business, client asset rules and custody.

Syllabus

-360 1. An Introduction to Operational Risk Management in Financial Institutions 2. The Drivers of Operational Risk Management 3. The Regulatory Environment 4. The Operational Risk Management Framework 5. Enterprise Wide Risk Management & Loss Data Collection 6. Modelling Operational Risk 7. Scenario Analysis 8. Introduction to Global Operations Management: Trading & Dealing Mechanisms 9. Settlement & Clearance 10. EU and Emerging Markets-International Clearing & Settlement. 11. Conduct of Business & Client Asset Rules, Custody

Learning Outcomes

On successful completion of this module, the student should be able to: 1.Critically discuss the drivers of operational risk and the categories of operational risks encountered by financial institutions.2. Evaluate models of operational risk management within the context of an enterprise-wide approach.3. Analyse how financial institutions manage risks within an operational risk management framework.4. Demonstrate a critical awareness of the current trends in operational risk management.5. Critically examine the operations of investment banks.6. Analyse the global operations of banks in the EU and emerging markets;7. Good understanding of the trading cycle and settlement/ clearance;

Teaching / Learning Strategy

The MSc International Banking, Finance and Risk Management programme is geared towards the development of business skills that encourage responsible leadership, internationalisation and professionalism, aiming to engage students in analysis, research and discussion of contemporary, real life issues. The teaching and learning strategy aims to embed these attributes. Face to face contact involves three hours of class contact per week: normally 2 lectures and 1 seminar. Lectures will be used to highlight the key issues in a specific topic and point the way towards relevant journal articles and other appropriate literature. Students will be then expected to prepare for following week's lectures on each topic by engaging in literature searches, undertaking relevant reading and preparing responses to discursive and where necessary, computational questions. The lectures will adopt a variety of teaching styles including seminar style contributions such as group discussion to enhance intellectual, critical and analytical skills. For more applied topics, students will be required to attempt relevant problem or scenario based questions prior to the lectures taking place, providing the basis for deepening professional skills, knowledge and understanding. Module classes are conducted in workshop format providing a mix of tutor led, student led and group learning. Extensive use is made of VLE to complement and support the face to face and independent learning elements of the module as well as enhancing the student learning experience and engagement. The V LE site used as a repository for resources including key readings such as scanned material, journal articles, book chapters, digital book chapters, web-links, embedded video clips but also for interactive forums such as discussion boards and blogs. The teaching and learning strategy includes 8 hours of practicals to complement the face to face delivery of the module and independent learning through such activities as specialist speakers, site visits related to project management and other academic community activities to enhance the learning experience such as an away-day to develop dissertation topics from within the distinct module areas. { 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

Indicative Reading

Acharya, V., Cooley, T., Richardson, M., Walter, I. (2010) Regulating Wall Street: The Dodd-Frank Act and the New Architecture of Global Finance, John Wiley and Sons Alexander C (2004) Operational Risk, Regulation, Analysis and Management, London, FT Prentice Hall Alexander, K. and Dhumale, R. (2011) Research handbook on International Financial regulation, London, Edward Elgar Anderson, A. (1998) Operational Risk and Financial Institutions, London, Risk Books Barth, J.R., Caprio, G.Jr., & Levine, R. (2004), 'Bank regulation and supervision: what works best?', Journal of Financial Intermediation, 13 (2) 205-248.g Bazley, S, and Haynes, A (2007) Financial Services Authority Regulation and Risk-Based Compliance, Tottel Publishing BCBS (2010) Basel III: A global regulatory framework for more resilient banks and banking systems, December 2010 (revised June 2011), Basel, Bank for International Settlements BCBS(2011) Core Principles for Effective Banking Supervision: Consultative Document, December 2011, Basel, Basel Committee on Banking Supervision Benston, G.J. (1998) Regulating Financial Markets: A Critique and some Proposals, Hobart Paper 135, London, The Institute of Economic Affairs Bessis, J. (2010) Risk Management in Banking (3 rd Ed.) London, John Wiley & Sons Blunden T & Thirlwell J (2010), Mastering Operational Risk, London, FT Prentice Hall Brunnermeier, M., Crockett, A., Goodhart, C. Persaud, A. and Shin, H.S. (2009) The Fundamental Principles of Financial Regulation, London, Centre for Economic Policy and Research (available electronically from CEPR) Buckham, D., Wahl, J. and Rose, S. (2010) Executive's Guide to Solvency II, London, John Wiley & Sons Carmichael, J., Fleming, A. and Llewellyn, D. (2004) Aligning Supervisory Structures with Country Needs, World Bank Institute (available electronically - see <http://www.scribd.com/doc/16060643/Aligning-Financial-Supervisory-Structures-with-Country-Needs-> Carney, C. et al. (2011) Regulatory Reforms and Remaining Challenges, Occasional Paer No.81, Group of Thirty Chorafas DN(2004) Operational Risk Control with Basel 2, Elsevier Butterworth-Heineman, Oxford CIOBS (2007) Operational Risk Management, Edinburgh, CIOBS Clark, G. & Johnston, R. (2005) Service Operations Management, London, FT Prentice-Hall Davies, H. And Green, D. (2008) Global Financial Regulation: The Essential Guide. Cambridge, Polity Press De Larosiere (2009) De Larosiere Report: The High Level Group on Financial Supervision in the EU, available electronically - see <http://ec.europa.eu/internal_market/finances/docs/de_larosiere_report_en.pdf> Dragomir, L. (2010) European prudential banking regulation and supervision : the legal dimension, <http://www.dawsonera.com/depp/reader/protected/external/AbstractView/S9780203856413/S27.53/0> Routledge -7 FSA (2008) Consumer Responsibility, London, Financial Services Authority (available electronically from FSA website) FSA (2009) : A Regulatory response to the global banking crisis, Discussion Paper 09/2, March 2009, London, Financial Services (available electronically from FSA website) FSA (2009) The Turner Review: A Regulatory response to the global banking crisis, March 2009, London, Financial Services Authority (available electronically from FSA website) Global Association of Risk Professionals (2009) Foundations of Banking Risk: An Overview of Banking, Banking Risks and Risk-based Banking Regulation, John Wiley & Sons Goodhart, C. (2004) (ed.), 'Financial Development and Economic Growth: Explaining the Links', Palgrave Macmillan, Basingstoke and New York. Goodhart, C. et. al. (1998). Financial regulation: Why, how and where now? London, Routledge Gray,J. and Akseli, O.(eds) Financial regulation in Crisis, Edward Elgar Publishing Group of Thirty (2008) The Structure of Financial Supervision: Approaches and Challenges in a Global Marketplace, Washington DC, available at: <http://www.group30.org/images/PDF/The%20Structure%20of%20Financial%20Supervision.pdf> Hoffman, D.G. (2002) Managing Operational Risk: 20 Firm-wide Best Practice Strategies, details to follow <http://siteresources.worldbank.org/INTTOPCONF6/Resources/2057292-1162909660809/F2FlemmingLlewellyn.pdf> Hudson, A. (2009) The Law of Finance (1 st Edition), London, Thomson Reuters Hussain, A. (2000) Managing Operational Risk in Financial Markets, Oxford, Butterworth-Heinemann Kern, A. (2006) Global Governance of financial systems: the international regulation of systemic risk, Oxford, Oxford University Press Labrosse, J., Olivares-Caminal, R., Sing, D. (2011) Managing Rsk in the Financial System, Edward Elgar Publishing Ltd Liaw, K.T. (2006) The Business of Investment Banking. 2 nd Edition. Wiley. Chapter 15 & 17 Llewellyn, D. (1999). The Economic Rationale for Financial Regulation, London, Financial Services Authority (available on FSA web site) Llewellyn, D. (2006) Institutional Structure of Financial Regulation and Supervision: the basic issues, Paper to World Bank Seminar, 6-7 June 2006, Available at: Loader D(2003) Controls, Procedures and Risk, Elsevier Butterworth-Heinemann, Oxford MacNeil, I. and O'Brien, J. (2010) The Future of Financial Regulation, Hart Publishing Marshall, C. (2001) Measuring and Managing Operational Risks in Financial Institutions, Singapore, John Wiley & Sons (Asia) Pte Ltd Mills, A. (2008) Essential Strategies for Financial Services Compliance John Wiley & Sons, ISBN: 9780470519042 Saunders, A. & Cornett, M.M. (2007) Financial Institutions Management: A Risk Management Approach, New York, McGraw-Hill SII (2010) Global Operations Management Study Book, London, BPP Schooner, H. and Taylor, M. (2009) Global Banking Regulation: Principles and Policies, Academic Press Tarullo, D. (2008) Banking on Basel: The Future of International Financial Regulation, The Peterson Institute for International Economics US Treasury Department (2009) Financial Regulatory Reform, A New Foundation: Rebuilding Financial Supervision and Regulation. available electronically - see <http://www.treasury.gov/initiatives/wsr/Documents/FinalReport_web.pdf> Journals International Journal of Bank Marketing Journal of Banking & Finance Journal of International Banking Regulation Journal of Financial Regulation & Compliance Journal of Financial Services Research Journal of Insurance Regulation Journal of International Financial Markets, Institutions and Money The Service Industries Journal Global Risk Regulator Internal Auditing & Business Risk International Journal of Bank Marketing Journal of Financial Intermediation Journal of Financial Services Resear

Transferrable Skills

-360 1.Problem-solving - identifying the main concepts and issues in problem situations and formulating solutions will be accomplished through practical work in lectures and seminars 2.Personal and interpersonal skills - self-responsibility will be emphasised through directed learning activity; seminars will be used to encourage co-operation and teamwork in the formulation and presentation of work 3.Communication - the ability to use appropriate language and form when writing and speaking will be enhanced by making verbal presentations in, and preparing written work for, seminars 4.Learning skills - the ability to enhance research skills will be acquired though carrying out research for seminars and assessed coursework

Module Structure

Activity Total Hours
Independent Learning (FT) 112.00
Assessment (FT) 44.00
Seminars (FT) 12.00
Lectures (FT) 24.00
Practicals (FT) 8.00

Assessment Methods

Component Duration Weighting Threshold Description
Exam (Exams Office) 2.00 50.00 45% Unseen written exam
Coursework 1 n/a 50.00 45% Essay (2,000 words)