Dear Delegate,

Acts of terrorism, natural disasters, the possibility of outbreaks of avian flu and other severe operational disruptions have forced central banks to focus on business continuity planning. As the apex of their national financial system, central banks cannot avoid such risks.

They can however ensure such risks are identified, and contingencies put in place. In times of market turmoil, maintaining confidence in central bank systems and the infrastructure supporting the financial sector more broadly takes on an added significance. Yet risk does not stand still – and central bankers’ approach must be dynamic.

This course has been designed to equip central bankers with the tools to manage operational risk, and design and deliver business continuity planning and disaster recovery initiatives programmes. It is a practical course with an emphasis on how specific national situations require a tailored approach.

The four days of the seminar are built around key themes of this new and fast-moving discipline:
• Creating a bank-wide operational risk culture
• Managing operational risk: the quantitative vs qualitative debate
• Developing a robust business continuity programme
• Reputational risks The benefits of participation are clear.

Delegates will learn in detail how other monetary authorities identify, measure, and manage the most important operational risks they face and how they plan to ensure that the central bank continues to operate in the face of natural and man-made disasters.

Delegates will be alerted to the possibility of risks they may not have considered. They will be challenged to respond to: “what if…?” questions.

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.

Since 1997, Central Banking Publications has hosted seminars for over 1,500 senior policymakers from central banks, ministries of finance and financial regulatory agencies around the world.

Senior officials from more than 100 countries have attended these meetings over the past ten years. We look forward to welcoming you to Cambridge on 2 September.

Robert Pringle
Managing Director, Central Banking Publications Ltd

Operational risk and business-continuity management: a key concern for the 21st century central banker
Introduction by the chairman, John Nugée

The evolution of operational risk management: some thoughts from the private
Philippa Girling
Attorney at Law, Garrity, Graham, Murphy, Garofalo and Flinn, P.C (formerly, Global Co-Head of Operational Risk, Nomura Holdings America)

Operational risk measurement and management techniques have been honed for many years now in the private sector and operational risk managers in large investment and commercial banks have been at the forefront of designing the operational risk managers role. In this session a leading private sector operational risk practitioner will examine the latest advances in both quantitative and qualitative approaches to operational risk management and investigate the future role of the operational risk function in financial institutions

Measuring operational risk: the quantitative vs qualitative debate
Michel Pozzo Di Borgo
Head of Operational Risk, Bank of France

A great deal of theory and practice focuses on the benefits of a quantitative approach to operational risk management, yet increasingly questions are being raised about whether it is in fact possible to accurately quantify this risk. To what extent should these measures be balanced by qualitative judgments? This session tackles this issue head on, and the speaker, from the Banque de France, will discuss whether there is sufficient data to undertake historical analysis of risks facing central banks and how this can be collected.

Operational risk management in practice: a case study
Hanna Franiak
Head of Operational Risk Management Unit, National Bank of Poland

In this case-study session, the head of the operational risk management unit at the National Bank of Poland, will discuss how the central bank decided on the methodologies to use for the management of operational risk, the quantitative and qualitative tools used and how the work of managing this risk is integrated into the wider functions of the central bank. Group debate will focus on the lessons learned in the development of the central bank’s specialised unit.

An assessment of new operational risk metrics
Hennie van Greuning
Senior Adviser, World Bank Treasury

Today there is no shortage of techniques and instruments to measure operational risk. How can central banks choose which one or ones to use? In this session the key analytical tools for operational risk will be reviewed and conclusions drawn about which are the most appropriate for particular functions. There will be specific focus on the role of risk-control self-assessments and scenario analysis in the quantification of operational risk. The speaker will examine how generic key risk indications can be integrated with business-line specific indications and how data from a variety of sources can be used

Group workshop: using quantitative tools to manage operational risk
Hennie van Greuning
Senior Adviser, World Bank Treasury
John Nugée
Director, Head of Official Institutions Group, State Street Global Advisors

In this workshop delegates will have the opportunity to discuss how the various quantitative operational risk management tools can be used in practice, investigate the extent to which they need to be balanced by qualitative considerations and review how the various resources available to risk managers can be implemented in practice.

Applying the high-level principles for business continuity
Alfred Seivold
Senior Bank Examiner, Federal Deposit Insurance Corporation

The development of 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 international principles for business continuity, developed by various organisations, 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. This session will outline the development of the principles and discuss their application.

Techonlogical innovaitons for the forward-looking risk manager
Speaker to be confirmed

The rapid increases in information and communication technologies is a double-edged sword for the operational risk and business continuity manager, on the one hand greater technological capability can enhance data collection mechanisms and improve reporting procedures on the other hand the increased complexity of such systems can lead to increased human error and magnify the effects of a power disruption. This session will therefore focus on both which recent technological offerings can enhance the work of the risk manager and where safe-guards need to be developed to protect systems and processes from problems resulting from greater complexity.

Safeguarding financial infrastructure
Stephen Collins
Head of Business Continuity Division, Bank of England

In 2008 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. This is especially true when systems needed to preserve confidence in local and international markets. This session outlines approaches to systems design and procedures for disaster planning and focuses specifically on the role of the central bank in maintaining business continuation of the wider financial sector.

Planning for and dealing with disaster recovery
Led by the chairman, John Nugée

Risk management planning is necessarily limited. 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 to analyse first-hand experiences of different risk scenarios. This session will draw on the experiences of the group in the area of contingency planning to consider how central banks can determine their business critical functions and provide safeguards and contingency facilities for these. Discussions will encompass the practicalities of moving functions to a secondary facility or setting up mirror systems.

Managing reputational risk
Ian Plenderleith
Former Executive Director, Bank of England

Ultimately operational risk and business continuity management systems are only valuable if they preserve a central bank’s assets and a central bank’s most valuable asset is its reputation. In this session, the speaker will consider what are the most important reputational risks facing central bankers and the place of the operational risk function establishing and maintaining the credibility.

Legal risks
Stefan Gannon

A discussion of the legal basis for what a central bank does, the risks central banks run if they overstep their legal powers and the consequences of legal or judicial review

Course summary and conclusions
John Nugée
Director, Head of Official Institutions Group, State Street Global Advisors

In this concluding workshop, the course chairman and participants will revisit the issues covered and draw out the lessons and conclusions from discussions. Delegates will be invited to reflect on what they have learned and how they can draw on their experiences in their work at their institution.