Risk Management for Banking and Securities Regulators (10-15 November 2013)

Venue: Mövenpick Hotel Berlin, Schöneberger Strasse 3, 10963 Berlin, Germany

  Saturday, Nov 9
  Arrival of participants and program leaders

  Saturday, Nov 10
  Networking tour, ice breaker & briefing on program

  Monday, Nov 11
08:00 - 08:30 Introductory Remarks Group Photograph
08:30 - 10:00 Repair and Maintenance of the financial plumbing---the Principles on Financial Market Infrastructures and the prevention of systemic risks

Andrea Corcoran, Chair, Securities Advisory Board, Toronto Centre and formerly a Director at the US CFTC

This session will discuss benchmarking financial market infrastructures and their potential shortfalls creating systemic risks
10:00 - 10:15 Coffee Break
10:15 - 12:15 Effective Stakeholder Communication & Persuasion

Hooi Eng Phang, Program Director, Toronto Centre

A session on how to convince stakeholders to support work proposals:
  • Analyze stakeholders – who they are, what they like and dislike and what is needed to get their support
  • Introduce the “Four box model” for effective persuasion and communication
12:15 - 13:00 Lunch Break
13:00 - 15:00 Basel III

Jan Willem Van der Vossen, Consultant and former Advisor, IMF

This session will:
  • Provide an overview of Basel III and the complementarity between Basel II and III
  • Review its risk management aspects and implementation challenges
  • Discuss what supervisors can expect and what they cannot expect from Basel III.
15:00 - 15:15 Coffee Break
15:15 - 17:00 Leadership Process - Action Planning

Hooi Eng Phang

A session to learn about a framework for tackling work challenges:
  • Approaching complex decisions and evaluating multiple options
  • Assessing the problem, developing a solution as well as an implementation plan
  • Applying the Action Planning Methodology to challenges faced by securities regulators
17:00 - 17:30 Individual Action Plan

Participants will start applying the Action Planning Methodology with the assistance of program leaders. The first day will focus on understanding the situation and producing a precise definition of the challenge
  • Approaching complex decisions and evaluating multiple options
  • Assessing the problem, developing a solution as well as an implementation plan
  • Applying the Action Planning Methodology to challenges faced by securities regulators
  Tuesday, Nov 12
08:30 – 08:45 Ideas I Will Use
08:45 – 10:15 Inward generated risk related to offshore fraud: Case Study on Refco (Appended with key issues from MF Global)

Andrea Corcoran

This case study deals with:
  • Quandaries of authorization, risk rating, and related information exchange
  • Miss- assessing risks: Window dressing or false reporting of financial condition
  • The competing concerns of stability - market protection versus market transparency
  • Mediating the interests and objectives of regulatory and criminal authorities with different mandates
  • Regulatory risks from unregulated business
10:15 – 10:30 Coffee Break
10:30 – 12:30 Case study on Refco (cont'd)
12:30 – 13:30 Lunch Break
13:30 – 15:00 Funding illiquidity and other short term financing issues: Case Study on Repurchase transactions and short term funding risks

Richard Britton

This case will deal with issues on recognizing, managing and mitigating systemic risk in a “shadow banking” product
15:00 – 15:15 Coffee Break
15:15 – 16:45 Funding illiquidity and other surprises (cont'd)
16:45 – 17:30
Individual Action Plan

Outline a plan

  Wednesday, Nov 13
08:30 – 08:45 Ideas I will Use
08:45 – 10:15 Case Study from Croatia: Podravka

Ivo Sulenta, former Commissioner, Croatia Securities Commission

This case study covers issues faced by many emerging markets:
  • Capital Markets Abuse
  • Conflicts of Interest
  • Fraud and asset hiding
10:15 – 10:30 Coffee Break
10:30 – 12:30 Case Study on Podravka (cont'd)
12:30 – 13:30 Lunch Break
13:30 – 15:00 Dealing with Problem Banks

Jan Willem van der Vossen

This session will focus on:
  • Awareness of the problem, objective and subjective signals
  • First response and systemic banking problems
  • Adequacy of legal/regulatory powers and tools
  • Preparation for action
  • Main resolution modes and transparency of resolution process
  • Handling the media
15:00 – 15:15 Coffee Break
15:15 – 16:45 Dealing with Problem Banks (cont'd)

Group activity will be based on the Trans-Bank case study
16:45 – 17:30 Individual Action Plan

Analyse Stakeholders and prepare presentation

  Thursday, Nov 14
08:30 – 09:15 Briefing on crisis simulation exercise

Andrea Corcoran and Leo Deng Cheang
  • The briefing will outline the objectives of this simulation, the roles assigned, the powers and authorities that players may draw upon, the role of moderators, the use of break out rooms, the development of information, the use of computers, and the rules of game etiquette. The exercise will permit players to address an evolving crisis that involves the transmission of risk within the financial sector.
  • Participants will be assigned to represent the exchange and clearing organizations, market participants, regulatory/supervisory, and other stakeholder roles. They will be asked to respond to events, based on their own mandates and concerns, upon individualized information, generic information provided to all groups, information that will be self-generated within the group, the release of information by program leaders and exogenous events.
  • Background information is in the computer and can be accessed by using the interactive table of contents.
  • Participants should attempt to develop immediate, medium and long term responses to risks arising from regulatory/exogenous events.
  • Program leaders for each team and the overall moderators can be consulted for help as needed.
09:30 – 12:30 Crisis Simulation----Group role play within a hypothetical jurisdiction
(Team members take turns to go for coffee break.)
12:30 – 13:30 Lunch Break
13:30 – 15:30 Crisis Simulation (cont'd)
15:30 – 15:45 Coffee Break
15:45 – 17:30 Crisis Simulation Debrief

Participants and Program Leaders debrief on participants' management of a crisis
18:30 Farewell Dinner

  Friday, Nov 15
8:30 – 08:45 Ideas I will Use
8:45 – 10:30 Action Plan Presentations by Participants
10:30 – 10:45 Coffee Break
10:45 – 12:30 Panel Discussion: Q & A on Risk Management

Andrea Corcoran, Richard Britton, Ivo Sulenta
  • Pro-active information sharing
  • Acting when you are not sure whether you have the requisite power
  • Sharing information across borders and financial sectors when there are insufficient funds to satisfy parties in both jurisdictions
  • Whose fitness determination is it anyway
  • Which comes first: Enforcement or following the money
  • Equitable issues and legal conflict: freezing assets, restitution
12:30 – 13:00 CLOSING CEREMONY
Concluding Remarks
Presentation of Certificates
13:00 – 14:30 Farewell Lunch