Autumn
2006 Training Course/Seminar Series
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Business Continuity and Risk Management in Central Banking 4-day intensive residential programme, 12 -
15 September 2006 |
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Dear Delegate,
BUSINESS CONTINUITY AND RISK MANAGEMENT IN CENTRAL BANKING
Business continuity planning has risen to the top of the
concerns of central bankers and financial regulators as they have responded
to the occurrence of natural disasters, the possibility of outbreaks of
avian flu and other diseases, frequent acts of terrorism and other severe
operational disruptions.
Sometimes, a country’s whole financial system may come under threat.
In December 2005, the Joint Forum published a report drawing lessons from
several national authorities’ experiences of events that have indeed
threatened their financial system.
The chairman of the group which produced the report and its high-level
principles for business continuity, John Sloan, will lead the discussion
on business continuity planning for central banks at this year’s
course.
More generally, the job of managing risk, which includes developing and
maintaining a working business continuity plan, is at the very heart of
the work of a central bank and regulatory agency.
As the focal point of national financial systems, central banks cannot
avoid taking risks. They can however ensure that risks are identified,
measured and managed. Yet risk does not stand still – and central
bankers’ approach to risk management must be dynamic.
This course provides a systematic approach to thinking on new risks –
and offers participants an update on latest techniques used by leading
central banks and monetary authorities to manage them.
The benefits of participation are clear. Group discussions to enable delegates
to compare their central bank's techniques and policy frameworks against
those of leading institutions. Delegates will learn in detail how other
monetary authorities identify, measure, and manage the most important
risks they face. They will be alerted to the possibility of risks they
may not have considered. They will be challenged to respond to: “what
if…?” questions. They will also learn how to apply risk modelling
techniques across the entire work of a central bank.
The independent standpoint of the conference sponsor, Central Banking
Publications Ltd, will naturally encourage free discussion of sensitive
issues and potentially allows a broader coverage of issues than courses
and conferences organised by official institutions, or by commercial conference
companies.
We are once again proud to present a distinguished panel of speakers to
lead group discussions moderated by the chairman, Peter Nicholl. I look
forward to welcoming you to Cambridge in September.
Yours sincerely,
William Clarke,
CBE, PhD Chairman
Chairman: Peter Nicholl, Former Governor, Central Bank of Bosnia & Herzegovina
New challenges
for central bank risk managers
Chua Kim Leng
Director, Specialist Risk Supervision
Department, Monetary Authority of Singapore (invited)
This session sets the scene for
those that follow by exploring the development of risk assessment and
risk management as a distinct unit in central banks in the context of
a survey of the rapidly-changing risk landscape. While each central
bank operates in a unique environment, common approaches to tackling
specialised risks can be utilised. The session will also discuss the
extent to which central banks can learn from the commercial sector how
to meet new and emerging risks. It will discuss those risks that appear
to be of growing importance to central banks in 2006–07 and how
a leading monetary authority attempts to model and manage those risks.
Promoting a risk management culture in a central bank
Workshop session led by
Peter Nicholl
Chairman
Risk management cannot stand still.
On an ongoing basis, central banks must identify emerging risks, whether
they arise from financial market developments, technological innovation
or political uncertainty.
In this opening workshop, group members will describe the pressing risk
management problems they currently encounter, and how they and their
institutions have gone about addressing them. They will then compare
results achieved.
Applying the
high-level principles for business continuity
John Sloan
Adviser, UK Financial Services Authority
and chairman of the
Joint Forum Business Continuity Working Group
For central banks, developing effective
business continuity plans is critical for the institution and the financial
system as a whole. Yet lessons from disaster management have typically
been kept behind closed doors. The development of international principles
for business continuity represents an effort to pool knowledge from central
banks, regulators and other public authorities around the world on how
to best to prepare for and manage crises. In this session the speaker,
who chaired the Joint Forum’s working group that produced the high-level
principles, will outline the development of the principles and discuss
their application.
Designing, implementing and testing effective
contingency plans
Angela Hobley
Senior Manager, Business Continuity
Division, Bank of England (invited)
In 2006 no central bank is unaware
of the requirement that all key business areas be included in effective
contingency plans. But these plans must be backed up by efficient management
structures to deliver them and ensure that they remain robust. What systems
are necessary to maintain central bank services in order to preserve confidence
in local and international markets? This session outlines approaches to
systems design and procedures for disaster planning.
Planning for and dealing with an
emergency situation
Workshops and plenary moderated
by
Peter
Nicholl and
Peter Bakstansky
Former
Vice-President, Federal Reserve Bank of New York
Whether planning to maintain business
continuity in the face of catastrophe, or working to resolve day-to-day
operational risk issues, risk management planning is necessarily limited.
In order to avoid triggering disaster, risk managers cannot “pull
the plug” to test continuity plans. In this context it is more valuable
than ever for risk managers to be able draw on each other’s first-hand
experiences of different risk scenarios.
This session will draw on the experiences of the group in the area of
contingency planning and discuss how central banks can provide safeguards
and contingency facilities, as well as integrate operational risk considerations
into their risk management framework.
Accounting
for reserves – a problem for risk managers everywhere
John
Nugee
State Street Global Advisors
and former Head of Reserve
Management at the Bank of England
Identifying balance sheet risks
Roundtable discussion led by
Peter Nicholl
Chairman
Low returns on assets have reduced central banks' income; a return to higher yields may even threaten their solvency. Yet the diverse nature of a central bank’s functions means that there is no definitive answer as to what constitutes capital adequacy. This session, in the form of a roundtable discussion led by Peter Nicholl, will discuss central bank balance sheet strength: how a central bank's solvency affects its independence, the central bank's role in managing risks on the national balance sheet and the question of how much capital a central bank needs and methodologies for calculating this.
Risk controls in a central bank’s governance framework
Jeremy Foster
Partner, PricewaterhouseCoopers
How do governance structures affect central bank risk management? Drawing on his experience in working with many central banks, the speaker will discuss recent trends in structuring the organisation, reporting lines, controls and responsibilities to ensure that the risks central banks face are mapped out and controlled.
The discussion will address the key considerations for central bank risk management and discuss how an effective corporate governance framework underpins the management of risk. This session will also examine new standards in the private sector (such as Sarbanes-Oxley rules in the United States), and consider whether central banks should follow these.
Quantifying operational risk
Hennie van Greuning
Senior Advisor, Treasury, World Bank
Operational risks is a complex and daunting task. An effective framework must address the cross-cutting nature of operational risk: in a typical set-up this incorporates operational risk management at the business unit level, control self-assessment managed by internal audit and quantitative operational risk measurement by risk control.
This session examines developments in best practice for central bank internal controls and the management of operational risk.
Establishing
a culture of operational risk governance
Jens
Ulrich
Head of Risk Control, Bank for International Settlements
For central banks, operational
risk control is critical. The session will address the appropriate framework
for tackling operational risk at central banks including provision for
disaster mitigation, crisis management as well as day-to-day operational
risk. The group will discuss how central banks can provide checks, safeguards
and contingency facilities and integrate operational risk considerations
into their central bank’s risk management framework.
Case-study: broadening the role of financial
risk management
Mark
Zelmer
Director, Financial Risk Office, Bank
of Canada
In this session, the speaker outlines
the corporate risk framework at the Bank of Canada and discusses work
underway to assess whether its Financial Risk Office could play a more
active role in monitoring and reporting on operational risk and balance-sheet
risks, and the techniques used to identify and measure these. The session
will also consider the institutional context and how development of the
risk management function affects reporting lines.
New developments in risk management
Paul
Chilcott
Head of Risk Analysis and Monitoring
Division, Bank of England
Paul Chilcott will elaborate on the Bank of England’s
approach to understanding the types of risks to be confronted: including
market, credit, liquidity and operational risk. He will discuss the control
processes used to manage risks and the methods by which these are monitored.
The session concludes with a panel discussion taking in the issues discussed
over the course of the day.
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