module specification

Risk management and stress testing has become increasingly significant in the Financial Services Industry, with pressures from regulators, governments, shareholders and other stakeholders for improved risk management. Boundaries of risk management and regulation are increasingly blurred for example with the Capital Requirements Directive (CRD) risk and capital requirements are directly linked.

The Regulators’ expectations and the recent economic climate is causing firms to focus more sharply on their operational and broader risks and the regulatory expectation is causing firms to address their risk appetite and effectiveness of controls against risks with more rigour. These areas together with stress and scenario testing are main areas of concern for financial services firms.  Stress testing, in particular has become increasingly widespread, and has been taken up by various governmental bodies (such as the PRA in the UK) or inter-governmental bodies such as the European Banking Authority and the International Monetary Fund) as a regulatory requirement on certain financial institutions to ensure adequate capital allocation levels to cover potential losses incurred during extreme, but plausible, events. The emphasis on adequate, risk adjusted determination of capital has been further enhanced by modifications to banking regulations such as Basel II.

It is these areas of risk identification and management and stress testing that will be examined during the module.

This module aims to provide a detailed, critical and evaluative knowledge of operational risk management and stress testing within Financial Services organisations.

The module aims to enable to students to:

• Appraise the international importance of risk and approaches to the management of risk within the Financial Services Industry.
• Have a critical understanding of the influence of European Law on operational risk management and stress testing;
• Appreciate the commercial importance of both operational risk management and stress testing;
• Enable students to critically evaluate the impact of global and commercial policy issues relating to operational risk management and stress testing.

No pre-requisites. Not available for Study Abroad.

The module will include:

• An introduction to the concept of Risk Management and Stress Testing;
• A consideration of regulatory and business drivers for operational risk management;
• The Regulatory expectations and requirements;
• Expectations for risk management;
• The integration of conduct and operational risk;
• Risk Identification and categorisation;
• Risk Assessment and Measurement;
• Different techniques (quantitative and qualitative) for assessing and measuring risk;
• Techniques for Alternative Risk Transfer (ART);
• Identification of emerging operational risks;
• Cyber risk;
• A consideration of how risk events can be utilised to effect change in operational risk culture.
• The PRA approach to Stress & Scenario testing;
• How regulatory pressures are expanding and shifting the focus of stress testing;
• Key challenges and priorities of enterprise-wide stress testing;
• Primary benefits of enterprise stress testing;
• Technology capabilities and systems that firms need to adopt for this changing environment;
• Solvency II and subsequent requirements;
• Understanding the main ORSA requirements which are formalised by Solvency II;
• The production of the ORSA;
• 2014 EIOPA’s stress test;
• Other main Solvency II disclosure requirements - the SFCR and the RTS.;
• Ensuring the Objectives of Stress and Scenario Testing meet Stakeholder Needs;
• Scoping and objectives;
• Reverse stress testing;
• A consideration of the use of stress testing and scenario testing to evaluate opportunities and in the business decision process.

Overview

Students will be taught by a combination of online lectures, interactive online seminars, one-to-one supervision, and self-study of a comprehensive module, with students encouraged to read from specified case law and legal journals. Students will be given the opportunity to discuss theoretical issues as well as practical problem solving.  Students will be supported in undertaking on-line research using electronic law databases and encouraged to use on line legal resources on a regular basis. There is a virtual learning environment containing handbooks, lecture notes, weblinks, discussion groups, study skills materials and assessment criteria. 

Experiential Learning

Students will be encouraged to respond to realistic case-studies relating to the sector, giving written legal opinions to clients in the style of a professional legal advisor. As an alternative core for the LLM award, students will be able to undertake and experiential learning project. Students will also be able to participate in the extracurricular experiential learning offered within the Law School, including the Pro Bono Clinic and the Mooting Club.

Study Support

Students will have regular access to module tutors by email and by one-to-one video conferences to support their studies. They will also engage with one formative assessment for each module, which will be marked promptly with opportunities for feedback either by email or individual online discussion.

On successful completion of the module students will be able to do the following:

1. To demonstrate extensive knowledge and understanding of Risk Management and Stress Testing for Financial Services Operations. (LO1)
2. To evaluate the commercial and government policy implications of Financial Services Law, Regulation and Compliance and appreciate its economic and social balance. (LO2)
3. To synthesise relevant case and statute law in order to present conflicting arguments. (LO3)
4. To demonstrate the ability to apply creative thinking to practical problems. (LO4)
5. To demonstrate confidence, resilience, ambition and creativity and to act as inclusive, collaborative and socially responsible professionals in their discipline. (LO5)

The module adopts the assessment strategy principles of GSBL which have been developed in the spirit of ESJ. These are:

1. The School is committed to ensuring that each student should not have more no more than 2 assessment points per 20 credit module.
2. We provide balanced forms of assessment, both in terms of its overall volume (measured in terms of assessment points and output required and the types used.
3. Group activities are part of the learning and teaching strategies but assessment is at the level of the individual. Thus, assessment focused on individual reflections and learning from participating in a group activity.
4. Flexibility/choice in assessment methods will be introduced wherever possible in order to facilitate different learning studies and support personalization

Assessment of the module will be by way of coursework, giving a choice of either a critical analysis of contemporary issues and/or experiential employment-related practical exercises.

In line with our policy on facilitating formative feedback to students, the assessment strategy is designed to provide formative feedback on a piece of contributing summary assessment before another summative component is due to be submitted.

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