Overview

The PRA ?Dear CEO? letter of 12 June 2019 highlighted aspects of fast-growing firms? (FGF) risk management and control that it felt were falling short of required standards. The letter directed that FGFs address their risk management framework in three crucial areas: ICAAP stress testing; asset quality origination process and review, and funding / lending analysis.

FGF senior managers and Board will wish to consider how best to ensure that relevant aspects of their firm's risk management processes and policy continue to meet regulator expectations.

This workshop will present a best-practice approach for how to respond, in practical ways, to the direction specified in the Dear CEO letter. The three key areas highlighted in the letter will be considered for discussion and debate, with a view to identifying what specific steps FGFs should be taking, relevant to their business model, in order to ensure their risk management framework is fit-for-purpose.

This is an interactive workshop that aims to raise awareness and understanding of recommended best-practice risk management principles for FGFs.

Delegates will gain a clearer understanding of how to ensure their stress testing, underwriting process and funding concentration key risks are managed to the satisfaction of the regulator.

By the end of this workshop you will be able to:

• Implement robust reviews and challenge understanding to ensure an effective and fit-for-purpose risk management framework (RMF)
• Set up triggering mechanisms to activate management actions in times of stress, as part of the Board-approved risk appetite statement (RAS)
• Address and manage concentration risk in funding and lending, and embed in the product origination process
• Implement a more effective, firm-specific scenario drafting and stress testing process, to reflect a more feasible impact of severe economic downturn
• Draft realistic management actions in the ICAAP and ILAAP

The workshop is interactive and high level, it is designed to stimulate debate and discussion, to assist delegates in arriving at an operating approach that is best suited to their specific business model and balance sheet structure.

AGENDA

The Risk Management Framework

• Operation and ingredients
• Appropriate resourcing level and infrastructure

Board Risk Appetite Statement

• Identifying Key Risk Indicators and Early Warning Indicators
• Setting triggering levels for ICAAP management actions

ICAAP and Stress Testing process

• Drafting firm-specific downturn scenarios
• Drafting realistic and viable management actions in event of stress
• Effective Board review and challenge
• The Reverse Stress test and impact
• Addressing concentration risk

Addressing Funding Concentration

• Funding sources
• Wind-down of TFS/FLS

Take this training in-house

If you have five or more delegates who wish to attend this workshop, it may be more cost effective to run it in-company. To find out more about in-company training, please contact the team on 0203 934 1197 or training@ukfinance.org.uk.