Description

Banks and financial institutions are exposed to a number of credit, operational, and market risks. The three Basel regulations – Basel I, II, and III – adopted a rigorous approach in their attempt to provide a reliable and risk-managed operating framework. They require banks to maintain an adequate capital level at all times in order to cover their aggregate risk. A number of approaches are used for identifying and measuring risk, then planning the capital requirement for the bank based on that risk.
This course provides an overview of various approaches used for capital planning. More specifically, it presents components of the standardized measurement approach, the IRB approach, and the advanced IRB approach. It also aims to identify market risk and the capital requirement to cover that risk. Finally, the course outlines the risk-adjusted return on capital to quantify the amount of capital necessary to support all of a bank’s operating activities.