Capital Adequacy Planning Approaches


Overview/Description
Target Audience
Expected Duration
Lesson Objectives
Course Number


Overview/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.

Target Audience
Financial services professionals, consultants, and sales professionals interested in providing or selling products and services to banks and other financial institutions, and everyone interested in understanding credit and markets risk exposure of banks and adequate capital requirements to cover those risks

Expected Duration (hours)
1.0

Lesson Objectives

Capital Adequacy Planning Approaches

  • identify capital adequacy requirements
  • select the components of the standardized measurement approach for credit risk
  • identify ways to estimate the risk parameters using the foundation and the advanced IRB approaches
  • recognize characteristics of capital adequacy planning approaches
  • identify market risks
  • recognize risk-adjusted return on capital components
  • match stages in the RAROC implementation to their descriptions
  • recognize characteristics of capital adequacy planning requirements and models
  • Course Number:
    fini_06_a02_bs_enus