Risk Management in Central Banking

Number of Lectures: 6-12 Total Hours: 24 Marking: MCT – 30%; Final Exam – 70%

Risks of central banking activities need to be analysed in a holistic manner, considering the interaction of different portfolios and operations. Central banks typically expose themselves to a variety of risks including market, credit, interest rate, operational, systemic and liquidity risk. As a key element of the risk management function at a central bank, the highest governance standards need to be observed, both in terms of the reporting lines and organisation of the risk management function.

The programme offers practical insights on issues such as: systemic risk, central bank governance, managing reputation risk; cyber risk facing central banks; development of reliable business continuity plans and how to response and manage new financial risk to central bank balance sheets. The module also covers crucial questions such as: if risk management is to be at the heart of central banking, how should the structure and governance of a modern central bank reflect this? What does this imply for the reform of the organisation of central banks? How can risk management solutions best be adapted to the particular challenges which central banks face? How have the leading central banks and international financial institutions developed and integrated risk management into their operational processes? How can central banks benchmark their work with best practice in risk management?