Basel II will be adopted by the end of June 2004, with implementation to take effect in Lebanon by year-end 2006, according to the Bank for International Settlements (BIS). The Basel committee developed more risk-sensitive standardized and internal measurement approaches to capital adequacy. The new framework is intended to align capital adequacy assessment more closely with the key elements of banking risks and to provide incentives for banks to enhance their risk measurement and management capabilities.
The primary changes to the minimum capital requirements set out in the 1988 Accord are in the approach to Credit Risk and in the inclusion of explicit capital requirements for Operational Risk . A range of risk-sensitive options for addressing both types of risk is elaborated. For credit risk, this range begins with the standardized approach and extends to the “foundation” and “advanced” internal ratings-based (IRB) approaches. A similar structure is envisaged for operational risk. These evolutionary approaches will motivate banks to continuously improve their risk management and measurement capabilities. In an increasingly complex and interdependent world of financial markets and products, only those organizations which are able to effectively manage and control their risks will have the ability to succeed. The Financial Risk Manager (FRM®) certification ensures that an individual possesses the body of knowledge necessary for independent risk management analysis and decision making. The FRM® examination is designed to test for a mixture of basic analytical skills, general knowledge and intuitive capability acquired through experience in capital markets. Notwithstanding all the sophisticated models currently used by organizations to manage risk, it is most often the simple "rule of thumb" techniques that allow successful risk managers to quickly assess and control risk, as well as test the assumptions and results of the models. It is these practical techniques that will be emphasized on the FRM® examination. In addition, the individual will be tested on the general risks of various markets and financial instruments, regulation, and credit risk concepts. The BASLE Committee has been examining the capital treatment of credit risk mitigation techniques, including collateral, guarantees and credit derivatives, and netting. The consultation process has confirmed the view that improved risk sensitivity in minimum capital requirements with respect to greater recognition of such techniques can provide positive incentives to banks to improve risk measurement and management. The FRM curriculum encompasses some of the most sophisticated techniques of mitigating credit risk. The FRM® examination is administered by the Global Association of Risk Professionals (GARP®). The FRM exam is based on the core body of knowledge that contains the following topics: Quantitative Analysis (10%) Market Risk Measurement and Management (25%) Credit Risk Measurement and Management (30%) Operational Risk Management and Legal, Accounting, and Ethics (25%) Risk Management and Investment Management (10%) Registration and Enrollment Procedure Please fill in the registration form and fax it to IFA 961 1 346550. The registration form can be downloaded from IFA's website: www.instffa.com To register you must return the signed registration form by 15 May 2004 for the full course cycle (parts 1 and 2) and by 30 September 2004 for the three-week review part (part 2). Class size will be restricted to a maximum of 25 students. The course management retains the right to decide whether the course will take place after the registration period has expired. Registrations will be accepted in the order of receipt and will be acknowledged in writing. Important: In order to take the FRM exam, candidates need to enroll directly with GARP in New York/USA. The enrollment form can be downloaded at www.garp.com. Make sure that the completed form is mailed to GARP before their registration deadline expires.
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