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Analytical tools such as the use of financial ratios, analysis of cash flows and future cash flows as well as sustainable growth will be introduced, practiced and applied by the participants. Focus areas of the training will include the importance of Due Diligence at the initiation stage of credits, Loan Structuring and Risk Administration; Monitoring/Early Warning/Problem Recognition as a continuous shared responsibility; and introduce Remedial Management tools. Additional risk disciplines will be presented to provide a working knowledge across the risk spectrum and how such risks are interrelated. PARTICIPANTS The course is recommended for risk management analysts and staff, relationship managers with a shared responsibility for risk, and product specialists with a need to understand credit risk. THIS PROGRAM ENABLES PARTICIPANTS TO…
Participants should be able to read and interpret company financial statements and/or completed the Fundamentals of Credit Analysis program (Credit Risk Management I) or its equivalent. Participants are also assumed to be proficient in the use of a financial calculator, such as TI Business Analyst, the HP 12C or HP19. LENGTH 3 days PRE-READINGS Participants will receive a package with several items that must be read before coming to the course; the documents “How Competitive Forces Shape Strategy” (Michael Porter), “S&P Guide to the Loan Market”, “The Four Pillars” and a copy of Case Studies, to be reviewed during the course. Each of the items selected for pre-reading are directly related to modules to be given in the Program. DAY 1: INTRODUCTION TO THE RISK MANAGEMENT FRAMEWORK Morning
The Dice Game This is a training game to be played in groups daily. The game is an allegorical simulation of the creation of loan portfolios. It teaches the concepts of probabilities behind risk ratings. Participants will learn about loss-absorption capacity and the importance of achieving risk/reward balance in creating credit portfolios. Ourbank Role Play This is a team building exercise. It is dynamic and entertaining as it begins the process of participant interaction, cooperation and working in teams. The case transmits the message that listening to each other and collaboration are important in striving to solve customer needs, especially when facing internal resource limitations. Framework for Analysis: Review of the Risk Management Framework We will undertake a summary review of this pre-reading/self study and follow it up with a workgroup exercise wherein the participants will identify key environmental factors likely to impact their business in a given country. Afternoon Case Study The case study presents an opportunity to do a thorough 4 pillar analysis beginning with the Macro environment then covering each of the four pillars. There is sufficient information about every aspect of the pillars to get into detailed discussion. This would include the nature of the business, the competition, the Porter model (showing how the business deals with suppliers and customers), barriers to entry, substitute products, etc. Structure Collateral and Guarantees This session reviews and places special emphasis on the correct structuring of transactions including purpose; ways out; covenants; pricing; collateral and personal business guarantees. Overnight Reading: Case Studies DAY 2: CASH FLOW, SUSTAINABLE GROWTH AND LOAN STRUCTURING Morning Review and Expectations Setting
Daily continuation of simulation. Cash Flow Basic presentation and calculation exercise on historical and projected cash flows. Sustainable Growth Introduction of the concepts of asset intensity and sustainable growth with examples and guidance as to how to use the concepts and formulas in analyzing client prospects and evaluating growth plans. Afternoon Monitoring & Early Warning (Part 1) Case Study In this session we analyze the financial statements and look at business decisions the company must make and how it will impact their future cash flow. Set in India, the Synthetic yarn manufacturer is facing liquidity problems. After performing and applying the Risk Framework Analysis to identify key success factors and key risk factors, the workgroups look at several key business proposals and decide whether they should be implemented or not to enhance the future cash flow projection. Case Study The first part of a practical case study that involves a preliminary due diligence on a client that was invited to leave the bank due to low profitability; however, a recent investment banking deal has put them back on the radar screen and there is strong recommendations from the investment banking team to reconsider extending credit facilities to their potentially lucrative client. Overnight Reading: Case Studies DAY 3: MONITORING AND EARLY WARNING Morning Review and Expectations Setting
Daily continuation of simulation. Case Study (Cont’d) Conclusion of Case Study from prior day. Following the due diligence the participants must decide on the terms for the client to make this a viable deal and ensure an acceptable return for the risk they will be taking, examining the risk ratings and the client’s positioning in their new market focus. Once the conditions have been agreed upon, the groups will now present them to the client in role play fashion amongst themselves negotiating the best terms possible for the bank and the client. The conclusions focus in on very important lessons learned and how we can better manage our risk with specific clients by applying the tools presented in the prior modules. Monitoring & Early Warning (Part 2) Afternoon Case Study This is a case study based on a real company. Participants will be expected to prepare presentations to discuss with the class using all of the tools presented during the course in order to make a credit decision whether we should work with this company and how to best mitigate the risks related with the transaction proposal. Participants should gain a clear understanding of how the risk management tools can be used to prosper business while protecting the assets of the institution through proper structuring and collateral or guarantees. Review and Conclusion of the Program
Risk Fundamentals and Essential Risk Skills I This 3-day program presents a comprehensive framework for making sound lending decisions. It introduces a well-defined methodology for credit risk analysis, emphasizing linkages between risk issues and financial constraints; showing how to identify critical strengths and weaknesses in management, the business, and the financial structure of companies; and presenting techniques for structuring credits to minimize potential risks. Topics include Management Analysis, Industry Sector Analysis and Competitive Positioning, Financial Strength, and Structuring and Collateral Support. This course is being offered in conjunction with The Globecon Group, LLC. Dates and Times: TBD Cost: TBD In order to register for the course, please click HERE. If you have any questions or concerns, please contact us at (212) 997-4444 or helpdesk@globecon.com |
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