THE INVESTMENT ASSOCIATION

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THE INVESTMENT ASSOCIATION UNDERSTANDING CAPITAL ADEQUACY IN INVESTMENT MANAGEMENT FIRMS 08 NOVEMBER 2017 A new and practical course, delivered in consecutive half-day sessions covering capital

1 THE INVESTMENT ASSOCIATION UNDERSTANDING CAPITAL ADEQUACY IN INVESTMENT MANAGEMENT FIRMS 08 NOVEMBER 2017 A new and practical course, delivered in consecutive half-day sessions covering capital adequacy and decision making, including the key regulatory requirements for ICAAP, Stress and Scenario Testing (SST) and Wind Down Key Learning Objectives: Session 1 Consider the main elements of an investment manager s balance sheet and how these are related to capital Understand why firms do not hold capital, the true nature of capital and why it is required Be able to identify the key risks to an investment manager s balance sheet and know how to embed capital management into business decisions Session 2: Know how to assess each key risk category in the ICAAP and how to choose an appropriate capital estimation approach Understand the key principles, approach and drivers of SST and what to include in the regulatory submission Understand the key requirements of the wind-down and reverse stress testing processes

08 NOV 2017 Background: Understanding Capital Adequacy in Investment Management Firms This is a unique course, focussing on capital adequacy for investment managers and based on the Investment

2 08 NOV 2017 Background: Understanding Capital Adequacy in Investment Management Firms This is a unique course, focussing on capital adequacy for investment managers and based on the Investment Association s ICAAP guide. The Individual Capital Adequacy Assessment Process (ICAAP) and the stress and scenario testing (SST) of a firm s capital is an important discipline that most managers and risk specialists in the sector should understand. The ICAAP and SST reports are the first documents that the Financial Conduct Authority (FCA) will assess before a Supervisory Review and Evaluation Process (SREP) visit and the quality of these will set the tone of the questions asked at the meetings. Further, the FCA will expect a firm s senior management and board to understand the concepts and results of the ICAAP and the SST and to use them to manage the business. The standards expected by the FCA are much higher than in the past and there is a high correlation between failed firms and the quality of their ICAAP and risk governance framework. Poor understanding of the ICAAP and SST can, at best, lead to higher additional regulatory capital requirements (at increased cost) and, at worst, the failure of the firm. In contrast, a good understanding can help to identify the risks to the business strategy and to optimise the use of capital. Recognising the importance of the ICAAP, the Investment Association has produced detailed guidance for member firms and this course expands on this guidance and provides practical measures for its implementation, based on the extensive experience of the course leader. Who should attend? The course is delivered in two parts. The morning session provides an introductory to intermediate level understanding of capital principles and is suitable for all staff up to senior manager and non-executive director level. The afternoon provides more technical explanation and guidance at an intermediate to advanced level, for those who will be more directly involved in the development of a firm s ICAAP, SST and wind-down. The programme should be of interest to both investment management firms and those providing services to such firms, in particular consultants, accountants and legal firms. It will appeal in particular to those engaged in Executive Management, Business Development, Investment Management, Institutional Relationship Management, Investment Operations and Administration, Finance, Risk, Compliance and Legal. It will also be relevant for specialists from organisations that support or provide services to investment management firms, such as Third Party Administrators, Consultants, Professional Services Advisers and Regulators. Lead trainer: Ian Davies has 34 years of financial services experience and specialises in risk management for investment managers at both fund board and corporate levels. Ian chairs the Investment Association s Risk & Regulation Committee and he is a non-executive director of ARKUS, which provides risk analytics, reporting and governance services to investment management managers in the UK and Luxembourg. Ian is one of the UK s leading experts on risk governance, capital and stress testing for asset managers, having developed and implemented ICAAPs for JPMorgan Asset Management, Schroders and Aviva Investors. In addition, he has managed the process for two successful regulatory SREP visits by the FCA, resulting in improved capital guidance in both cases. In-house training option: All advertised IA training programmes are available to be delivered in-house. Bespoke tailored training can help you achieve your organisation s development objectives, which we at the IA and our training partners are happy to assist you with. For more detailed information should you have any in-house requirements, please contact Ryan White, Training and Development Manager via ryan.white@theia.org or telephone:

08 NOV 2017 Understanding Capital Adequacy in Investment Management Firms Session One Session Two 09:00 Welcome - Background and session objectives Introduction: A look at a typical investment

3 08 NOV 2017 Understanding Capital Adequacy in Investment Management Firms Session One Session Two 09:00 Welcome - Background and session objectives Introduction: A look at a typical investment manager s balance sheet Assets and liabilities Economic capital, regulatory capital, surplus capital Capital resources vs. capital requirements Capital requirements: Pillar 1 Pillar 2 (ICAAP) Wind-down Individual capital guidance (ICG) Case study: A case study will be used to illustrate the effects of changing key parameters on the balance sheet and the capital requirements. Stress and scenario testing guest speaker A representative from a member firm, or an audit and assurance firm, will speak about their experience of applying stress and scenario testing to business plans. 11:00 Morning coffee break How to assess the capital implications of the business strategy and new business initiatives Pillar 1 capital drivers Pillar 2 capital drivers Wind-down capital drivers Stressed and unstressed impact on capital projections Capital assessment template 13:00 Lunch Case study: The case study will be developed to show how business changes can impact the capital position Welcome - Background and session objectives ICAAP Risk identification Risk appetite Quantitative risk assessment, including: - Operational risk - Market risk - Credit risk - Interest rate risk - Pension obligation risk Pillar 1-plus vs. bottom-up approach and the FCA s guidance Case study: A worked ICAAP example will be developed to illustrate the key concepts. Capital stress and scenario testing Identifying risk drivers Defining stress scenarios Building the capital stress testing model practical considerations Preparing the regulatory stress and scenario testing report key points to include Case study: An example stressed capital plan will be used to illustrate the key concepts. 15:30 Afternoon tea Wind-down analysis and reverse stress testing Wind-down and reverse stress testing scenarios Impact and risk assessment Financial plan Operational wind-down plan Communications plans Case study: An example wind-down plan will be used to illustrate the key points. ICAAP format and content Meeting stakeholder requirements What to include in the ICAAP 17:30 Course conclusion

4 TRAINING COURSE BOOKING FORM COURSE TITLE: COURSE DATE: NAME OF BOOKER: COMPANY NAME: JOB TITLE: COMPANY ADDRESS: POSTCODE: TELEPHONE: 1st DELEGATE DETAILS FIRST NAME: SURNAME: COMPANY: JOB TITLE: TELEPHONE: Your special needs or dietary requirements: 2nd DELEGATE DETAILS FIRST NAME: SURNAME: COMPANY: JOB TITLE: TELEPHONE: Your special needs or dietary requirements: Please use additional copies of this form to book more than two delegates. Please briefly state the participants/your objectives in attending this course: NB: Please check carefully that these personal objectives are consistent with the Key Learning Objectives and with the guidance on Who Should Attend outlined in the course brochure. (Continue on a separate sheet if necessary) Contact us by: Phone: +44 (0) Training@theia.org Post: The Investment Association, Camomile Court, 23 Camomile Street, London EC3A 7LL

5 COURSE FEES (see our terms and conditions below) ARE YOU AN INVESTMENT ASSOCIATION MEMBER? YES NO WHICH SESSION WOULD YOU LIKE TO ATTEND? AM PM BOTH IA MEMBERS RATE = VAT PER SESSION OR VAT FOR BOTH SESSIONS. NON-MEMBER RATE = VAT PER SESSION, OR VAT FOR BOTH SESSIONS. COURSE FEE = (PLEASE INCLUDE VAT) PAYMENT OPTIONS - PLEASE CHOOSE EITHER INVOICE OR CREDIT CARD PLEASE INVOICE PROVIDE PURCHASE ORDER NUMBER: VISA MASTERCARD CREDIT CARD NUMBER EXPIRY DATE CARDHOLDER NAME CREDIT CARD S REGISTERED ADDRESS (POSTCODE & HOUSE/BUILDING NUMBER ONLY) POSTCODE STREET/HOUSE/BUILDING NUMBER TERMS AND CONDITIONS Payment for the course must be made in full before the course commencement date. Any cancellation must be made in writing. For all cancellation received days prior to the course start date, 50% of the course fee is still payable. No refund is given for a cancellation made 14 days or less prior to the commencement of a course. Transferring from one course to another is treated as a cancellation. You can substitute one delegate for another at no additional cost. In this instance, please give two business days notice. DATA PROTECTION: The Investment Association will use the data you provide to process your registration. We would also like to use the data to keep you informed (by post, telephone or ) of other Investment Association training courses, products and services. If you do not want us to do so, please tick this box: OTHER IA TRAINING COURSE TOPICS INCLUDE: INVESTMENT RISK (HALF-DAY) INSTITUTIONAL INVESTMENT MANAGEMENT - WHAT MAKES THE BUSINESS TICK? UNDERSTANDING CAPITAL ADEQUACY IN INVESTMENT MANAGEMENT UNDERSTANDING REGULATION AND COMPLIANCE IN INVESTMENT MANAGEMENT FIRMS UNDERSTANDING THE USE OF DERIVATIVES WITHIN INVESTMENT MANAGEMENT FIRMS UNDERSTANDING AND MANAGING RISK IN INVESTMENT MANAGEMENT FIRM MANAGING CLIENT ASSETS AND CLIENT MONEY (CASS) AN INTRODUCTION TO DERIVATIVES (HALF-DAY) UNDERSTANDING THE BUSINESS OF RETAIL INVESTMENT FUND MANAGEMENT COMPANIES FINANCIAL MARKETS AND THE BUSINESS OF ASSET MANAGEMENT FOR ADDITIONAL PROGRAMME INFORMATION, PLEASE VISIT THE IA WEBSITE OR CALL:

The Investment Association Camomile Court, 23 Camomile Street, London, EC3A 7LL T: +44

6 The Investment Association Camomile Court, 23 Camomile Street, London, EC3A 7LL T: D: E: Follow us on

A practical one day course on SYSC for employees working within investment management, or in irms providing support services.

THE INVESTMENT ASSOCIATION UNDERSTANDING SYSTEMS AND CONTROLS (SYSC) IN INVESTMENT MANAGEMENT FIRMS 23 NOVEMBER 2016 A practical one day course on SYSC for employees working within investment management,