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Risk Management and Credit Derivatives Program

May 5 - May 9

Program Overview

The Risk Management and Credit Derivatives Program is a comprehensive 5-day training aimed at providing participants with an in-depth understanding of the risk management strategies employed in financial markets, with a focus on credit derivatives. This program is designed for professionals who seek to enhance their ability to manage financial risk, particularly in the context of credit products and derivatives. Participants will learn how to evaluate credit risk, structure credit derivative products, and use them as tools for hedging and portfolio management.

Through expert-led sessions, case studies, and practical exercises, the program will equip participants with the knowledge and tools to effectively manage risk in credit markets and understand the complexities of credit derivatives.


Learning Objectives

By the end of the program, participants will:

  1. Understand the core principles of risk management and how they apply to credit derivatives.
  2. Learn how to evaluate and manage credit risk in a variety of financial instruments and transactions.
  3. Understand the structure and mechanics of credit derivative products like Credit Default Swaps (CDS) and Collateralized Debt Obligations (CDOs).
  4. Explore strategies for using credit derivatives to hedge credit risk, manage portfolio exposure, and enhance risk-adjusted returns.
  5. Gain hands-on experience in the use of credit derivatives through practical exercises and case study analysis.

Program Structure

Day 1: Introduction to Risk Management in Credit Markets

  • Objectives:
    • Understand the key concepts in financial risk management.
    • Learn the basics of credit risk and the role it plays in financial institutions and markets.
  • Topics Covered:
    • Risk Management Frameworks:
      • Overview of risk management principles: risk identification, measurement, monitoring, and control.
      • Types of risks in financial markets: market risk, credit risk, operational risk, and liquidity risk.
    • Credit Risk Overview:
      • Defining credit risk and understanding its implications for financial institutions and investors.
      • Types of credit risks: default risk, counterparty risk, and credit concentration risk.
    • The Role of Credit Risk Management:
      • Risk assessment techniques: credit ratings, credit spreads, and credit scoring models.
      • Tools and techniques for measuring credit risk.
  • Activity:
    • Credit Risk Assessment: Participants will analyze the creditworthiness of various financial instruments using credit risk metrics.
  • Assignment:
    • Write a reflection on the challenges of managing credit risk in a dynamic financial market environment.

Day 2: Credit Derivatives – Structure and Mechanics

  • Objectives:
    • Gain a solid understanding of the structure and function of credit derivatives.
    • Learn about the various types of credit derivative instruments used in risk management.
  • Topics Covered:
    • Introduction to Credit Derivatives:
      • What are credit derivatives and why are they used?
      • Types of credit derivatives: Credit Default Swaps (CDS), Collateralized Debt Obligations (CDOs), Total Return Swaps (TRS), and Credit-Linked Notes (CLNs).
    • Credit Default Swaps (CDS):
      • How CDS contracts work: protection buyer vs. protection seller.
      • Pricing and valuation of CDS.
      • Market participants in CDS transactions.
    • Collateralized Debt Obligations (CDOs):
      • Structure and purpose of CDOs.
      • The role of tranches and the mechanics of CDO pricing.
      • Risks and benefits of CDOs.
  • Activity:
    • Credit Derivatives Simulation: Participants will use a hypothetical scenario to understand how a Credit Default Swap works and how to price it.
  • Assignment:
    • Analyze the risks and benefits of using CDS and CDOs in a credit portfolio.

Day 3: Using Credit Derivatives for Hedging and Risk Management

  • Objectives:
    • Learn how to use credit derivatives as tools for hedging credit risk.
    • Explore the role of credit derivatives in portfolio management and risk mitigation strategies.
  • Topics Covered:
    • Hedging Credit Risk with CDS:
      • How CDS can be used to hedge against credit default risk.
      • Case studies on hedging strategies using CDS in different market environments.
    • Using CDOs for Risk Diversification:
      • How CDOs can be used to diversify credit risk across different asset classes.
      • Evaluating CDOs as part of a broader portfolio strategy.
    • Risk Management in Credit Portfolios:
      • Credit risk mitigation techniques: portfolio diversification, risk limits, and credit derivatives.
      • Integrating credit derivatives into risk management frameworks.
  • Activity:
    • Hedge Strategy Design: Participants will design a hedging strategy using CDS to mitigate credit risk in a hypothetical portfolio.
  • Assignment:
    • Develop a comprehensive risk management plan for a portfolio using credit derivatives to hedge credit exposure.

Day 4: Advanced Credit Derivatives and Structured Products

  • Objectives:
    • Dive deeper into more complex credit derivative products and structured credit products.
    • Understand the role of credit derivatives in managing systemic risk.
  • Topics Covered:
    • Advanced Credit Derivative Structures:
      • Synthetic CDOs, CLOs (Collateralized Loan Obligations), and bespoke credit derivative structures.
      • Pricing and valuation complexities in structured credit products.
    • Credit Derivatives in Managing Systemic Risk:
      • The role of credit derivatives in managing systemic risk within financial institutions and across markets.
      • Lessons learned from the 2008 financial crisis and the use of credit derivatives in the crisis.
    • Credit Derivatives and Regulatory Frameworks:
      • Key regulations impacting credit derivatives: Dodd-Frank Act, Basel III, and other global regulations.
      • The impact of regulations on the credit derivatives market.
  • Activity:
    • Credit Derivative Valuation Exercise: Participants will work on pricing complex credit derivative products using real-world market data.
  • Assignment:
    • Provide an analysis of how the use of structured credit derivatives can impact systemic risk and portfolio performance.

Day 5: Credit Derivatives in Practice – Case Studies and Strategies

  • Objectives:
    • Analyze real-world case studies of credit derivative transactions.
    • Apply learned concepts to create strategies for credit risk management.
  • Topics Covered:
    • Case Study Analysis:
      • Detailed examination of high-profile credit derivatives transactions: successes, failures, and lessons learned.
      • The role of credit derivatives in corporate finance and investment banking.
    • Developing Credit Derivative Strategies:
      • Building hedging and investment strategies using CDS and CDOs.
      • Best practices for structuring credit derivative trades to optimize risk-return profiles.
    • Future Trends in Credit Derivatives:
      • Emerging trends in the credit derivatives market: innovation, market growth, and challenges.
      • The evolving regulatory landscape and its impact on credit derivatives markets.
  • Activity:
    • Case Study Workshop: Participants will work in groups to analyze a real-world credit derivatives case and propose an optimal risk management strategy.
  • Assignment:
    • Finalize a comprehensive credit risk management plan for a financial institution incorporating credit derivatives.

Program Delivery

  • Format:
    • In-person or virtual (interactive sessions, case studies, group discussions, hands-on exercises, guest speakers).
  • Duration:
    • 5 full days (6-8 hours per day).
  • Target Audience:
    • Risk managers, portfolio managers, credit analysts, financial analysts, compliance officers, and professionals involved in credit products, derivatives, or risk management.

Certification

Upon successful completion of the program, participants will receive a Certificate in Risk Management and Credit Derivatives, recognizing their expertise in managing credit risk and leveraging credit derivatives for effective risk mitigation and portfolio management.

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Details

Start:
May 5
End:
May 9
Cost:
Ksh82500.00
Event Category:
Website:
www.globopointconsultants.com

Venue

NAIVASHA
Naivasha, Kenya + Google Map

Organizer

Globopoint Consultants Limited
Phone
0722103961
Email
info@globopointconsultants.com
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