Basel III and Risk Management (incl ERM & ICAAP)
Basel II has been criticised, unfairly, for failing to cope with the stresses of the credit crunch but in reality, no amount of capital or regulation would have protected the banking system from its decision to create huge positions in financial instruments that most of them did not fully control or manage. In fairness, the reluctance of regulators to use their powers was also a key contributor, with the world's biggest banks considered too big to fail and very difficult to manage. A prime example is Barclays, which we now know was sent more than one letter by its regulator expressing a loss of confidence in the CEO, yet he survived.
Basel III has given regulators 'superpowers' and they are using them with the full support of a shocked public. There has never been a time in recent history when banks have been so closely micro-managed. Will this make them safer? The jury is still out. Meanwhile Basel III has been adopted almost universally with the increased capital changes brought forward very rapidly. However, it is a 'work in progress' with the LCR being phased in from 2015 and the NSF still under debate.
Meanwhile the Vickers Report hangs over banks like a sword of Damocles as we await the actual details of retail and corporate banking separation due to be implemented by 2019 in the UK. Trapped liquidity is the minimum consequence.
As we consider what might be in Basel IV, what is clear is that the move towards even closer supervision and separation of bank activities will continue and we can expect more emphasis on qualitative rather than quantitative controls with both liquidity and capital adequacy at the forefront. The leverage ratio is a much debated topic with 5% being the regulators' preference, 3% the banks.
This course is designed to explain to delegates in a South African banking environment, the role of Basel II and its successor, Basel III in the risk management function. It demonstrates how it adds value to an organisation despite its flaws and explains the key components of risk management.
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- Lectures 0
- Skill level All level
- Language English
- Assessments Self