IIBF Certificate Examination in Operational Risk Management

Objective

The primary objective of this course is to develop a thorough understanding of operational risks encountered in the day-to-day functioning of banks, along with their identification, assessment, measurement, and mitigation. It also seeks to build competencies in implementing effective risk management practices and fostering a strong risk culture within the organisation.

Eligibility:

• Members and Non-Members of the Institute
• Candidates must have passed the 12th standard examination in any discipline or its equivalent.

Subject of Examination

Operational Risk Management

Passing Criteria

Minimum marks for pass in the subject is 50 out of 100.

Examination fees

* Plus Convenience charges and Taxes as applicable.

Please Note: Candidates are required to Register for every attempt separately.

As a measure to streamline the traffic for registration, Institute will charge regular examination fee to candidates who registers for the examination during the first week of registration.

• For second and third week of registration, the fees will be regular examination fee plus Rs. 100/-.
• For fourth week of registration, the fees will be regular examination fee plus Rs. 200/-.
• In case the registration date is extended beyond 4 weeks, the examination fees will be regular examination fee plus Rs. 200/- for the extended days.

The fee once paid will NOT be refunded or adjusted on any account.

Medium of Examination

Examination will be conducted in English only.

Pattern of Examination

• Question Paper will contain 100 objective type multiple choice questions for 100 marks.
• The examination will be held in Online Mode only.
• There will NOT be negative marking for wrong answers.

Duration of examination

The duration of the examination will be of 2 hours.

Periodicity and Examination Centers

• Examination will be conducted on pre-announced dates published on IIBF Website. Institute conducts examination on half yearly basis, however periodicity of the examination may be changed depending upon the requirement of banking industry.
• List of Examination centers will be available on the website. (Institute will conduct examination in those centers where there are 20 or more candidates.)

Procedure for Applying for Examination

Application for examination should be registered online from the Institute's website www.iibf.org.in. The schedule of examination and dates for registration will be published on IIBF website.

Syllabus

MODULE A

• The Evolution of Risk Management in Indian Banking: From Tradition to Transformation
  Risk Management Practices in Ancient India, Risk Management Practices during the Mughal Period, Risk Management in Pre-Independent India, Post-Independence Era: From Private to Public Banking (1947–1960s), Social Control and Nationalisation Era (1960s–1980s), Early Modernization and Emerging Challenges (1980s), Pre-Reform Period: Mounting Systemic Risks (1980s–1991), The 1991 Economic Reforms: A Watershed Moment for Indian Banking and Risk Management, Post-Reform and Contemporary Banking, Implementation of Basel Committee Recommendations.
• Understanding the Nature of Risk
  Risk as Part of Life, Definition of Risk, Elements of Risk, Financial Risk vs Non-financial Risk, Diversifiable and Non-diversifiable Risk, Interconnectedness among Banking Risk.
• What is Operational Risk? Concepts and Challenges
  Emerging Patterns in Operational Risk, Definition of Operational Risk, Advantages of Event Type Definition, Complex nature of Operational Risk.
• Regulatory Response to Operational Risk and Resilience
  Basel Committee on Principles of Sound Management of Operational Risk (PSMOR), RBI’s 2024 Guidance Note: A Major Update from its 2005 Version, Action Points to implement the new guidelines in the bank.
• Operational Risk Management Framework (ORMF)
  What is ORMF, Key Objectives of an Effective ORMF, Operational risk cycle, Elements of Operational Risk Management Framework, Organisational Structure, Operational Risk Management Policies and Strategies.
• Operational Risk and Enterprise Risk Management (ERM)
  Why ERM Suits Operational Risk Management, Enterprise Risk Management, COSO Integrated Framework 2004, Internal Control as A Part of ORM, COSO 2017 Enterprise Risk Management integrating with Strategy and Performance, Limitations of Enterprise Risk Management.

MODULE B

• Operational Risk Governance and Culture
  Internal Risk Governance System, Governance Structure and Accountability, Operational Risk Culture.
• Operational Risk Identification and Event Classification
  Why Identifying Operational Risk Is Uniquely Challenging, Operational risk identification process, Top Down Approach Process, Bottom-Up Approach Process, Recording loss events data.
• Internal and External Loss Data and Root Cause Analysis
  Purpose of gathering Loss Data, Minimum Loss Standard, Near-misses and Opportunity Costs, Risk Event Type, Operational Risk Event Database, External Data, Root Cause Analysis.
• Self-Assessment Process (RCSA)
  Objectives of Conducting Self-assessment, Role of Self-assessment in Operational Risk Management, Methods of Conducting Self-Assessment Process, Mitigation Plan, Frequency and Timing, Reporting and Escalation.
• Risk Appetite
  Challenges in Setting Operational Risk Appetite, Importance of Setting Risk Appetite, Risk Capacity and Risk Tolerance, Operational Risk Appetite, Process of setting Operational Risk Appetite.
• Scenario Analysis
  Need for Scenario Analysis, RBI Definition, Regulatory Expectations from Scenario Analysis, Scenario Development Process, Scenario Analysis Output, Review and Refine Risk Models.

MODULE C

• Mitigation of Operational Risk and Major Non-Financial Risks
  Importance of Control and Mitigation in ORMF, Strategies to Mitigate Operational Risk, Regulatory Risk, Fraud Risk, People Risk, Reputation Risk, Legal Risk.
• Internal Control System and Risk Focused Internal Audit (RFIA)
  Control System, Understanding Control Risk, Backup Systems and Redundancy, Insurance, Risk Focused Internal Audit.
• Metrics (KRI/KPI/KCI)
  Components of Risk Metrics, Leading and Lagging Metrics, Metrics Selection Process, Setting Threshold, Escalation Triggers, Monitoring and Reporting.
• Change Management
  Role of Changes in Banking, Change Management Framework, Regulator’s Expectations, Challenges Faced by Banks in Implementing Change Management framework.
• Measurement of Operational Risk
  Methods and Tools for Measurement of Operational Risk, Integrated Operational Risk Measurement Process, Loss Data-Based Model, Scenario Analysis, Hybrid Approach.
• Capital Charge for Operational Risk
  Basel Guidelines on Capital Charge against Operational Risk, Basel III Standardised Approach, Challenges in Migrating to the Basel III Standardised Approach.

MODULE D

• Operational Resilience Framework
  Drivers of Operational Resilience, Objectives of Operational Resilience, Operational Resilience Governance Framework, Business Impact Analysis, Impact Tolerance Limits, Scenario Testing and Stress Testing, Monitoring of operational resilience.
• Business Continuity Plan (BCP)
  Benefits of having a Business Continuity Plan, Governance Structure, Business Continuity Planning Process, Risk Monitoring.
• Incident Management Framework
  Characteristics of Risk Incidents, Objectives of Incident Management Framework, Types of Incidents, Incident Management Process.
• Third-Party Dependency Management
  Benefits of outsourcing, Risks Associated with Outsourcing, Regulator’s Expectations, Third-Party Dependence Risk Management Framework, Ongoing Monitoring, Business Continuity and Resilience.
• Information and Communication Technology (ICT) including Cyber Security
  Definition and Scope of ICT Risks, ICT and Cyber Security Risk Management Framework, Identification and Assessment of ICT Risk, IT Infrastructure & Services Management, Cyber Incident Response and Recovery Management, Information Systems Audit.
• Climate Risk and Operational Resilience
  Reasons for Climate Change, Paris Agreement and its Implications for Operational Risk, Climate Change-Related Operational Risks, Physical Risk, Transition Risk, Climate-Related Financial Risk Management Framework, Best Practices to Mitigate Climate Risk Related Operational Risk.

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