Q2: What is the benefit of IT-Basel II Foundation Certification?

A2: IT-Basel II Foundation Certification can benefit employees, consultants and organizations. 

Employees and Consultants  

IT-Basel II Foundation Certification provides Consultants, IT and Information Security Directors, Managers and Professionals, Chief Risk and Compliance Officers, Process Owners, Network, System and Security Administrators with the following benefits:

• Earn more money: Several recent salary surveys reveal the power of certification to boost income. These surveys show certified professionals earn more money than non-certified professionals, as their skills grow and can command a higher paycheck.
• Get a better position: Certification is important when being considered for a promotion or other career opportunities. You give the necessary assurance that you have the knowledge and skills to accept more responsibility.
• Get a better job: It will be easier to move on to another position to get more money and more desirable positions. This certification will differentiate yourself from your competitors.
• Establishes professional credentials: Certification is an advantage on your resume, serving as a third-party endorsement to your knowledge and experience. Certification and training listed on your resume demonstrates your ability and your desire to stay current. 

Organizations

IT-Basel II Foundation Certification provides organizations with the following benefits:

• Independent evidence: IT-Basel II Foundation Certification serves as independent evidence that you have the skills required to understand and support the Basel ii compliance project.
• Job satisfaction: Certified employees are more satisfied and more productive than their non-certified counterparts.
• Due care: Certified professionals will greatly assist employers in being able to construct a viable Basel II compliance program, and to prove that they exercise due care. Certified employees are more satisfied and more productive than their non-certified counterparts.

Q3: What will the IT-Basel II Foundation exam cover?  

A3: The IT-Basel II Foundation exam will cover the following areas:

First Basel Capital Accord

• Credit Risk and Risk Weights
• On-balance sheet engagements
• Off-balance sheet engagements
• Examples of capital requirements

The New Basel Capital Accord (Basel II)

• New capital adequacy framework replaces the 1988 Accord
• "Sufficient assets" to offset risks 
• The technical challenges for both banks and supervisors
• How much capital is necessary to serve as a sufficient buffer?
• The three-pillar regulatory structure
• Purposes of Basel II
• Scope of the applicationPillar 1:
• Credit Risk – 3 approaches
• The standardized approach to credit risk
• Claims on sovereigns
• Claims on banks
• Claims on corporate
• The two internal ratings-based (IRB) approaches to credit risk
• Some definitions: PD - The probability of default, LGD - The loss given default, EAD - Exposure at default, M – Maturity
• 5 classes of assetsPillar 2:
• Key principles
• Aspects and issues of the supervisory review processPillar 3:
• Disclosure requirements
• Qualitative and Quantitative disclosures
• Guiding principles
• Employees Affected
• Effective Dates

Framework for internal control systems in banking organizations - Basel Committee on Banking Supervision

• The 13 Principles for the Assessment of Internal Control Systems
• The 13 Principles and COSO
• The control environment
• Risk assessment
• Control activities
• Information and communication
• Monitoring
• Types of control breakdowns typically seen in problem bank cases
• The objectives and role of the internal controls framework
• The major elements of an internal control process
• Evaluation of internal control systems by supervisory authorities
• Role and responsibilities of external auditors
• Supervisory lessons learned from internal control failures  

Operational Risk

• What is operational risk
• Legal risk
• Information Technology operational risk
• Operational, operations and operating risk
• The evolving importance of operational risk
• Quantification of operational risk
• Loss categories and business lines
• Operational risk measurement methodologies
• Identification of operational risk
• The Delphi method

Operational Risk Approaches

• Basic Indicator Approach (BIA)
• Standardized Approach (SA)
• Alternative Standardized Approach (ASA)
• Advanced Measurement Approaches (AMA)
• Internal Measurement Approach (IMA)
• Loss Distribution (LD)
• Standard Normal Distribution
• "Fat Tails" in the normal distribution
• Expected loss (EL), Unexpected Loss (UL)
• Value-at Risk (VaR)
• Value-at Risk and Basel I amendment, 1996
• Value-at Risk and Basel II
• Calculating Value-at Risk
• Monte Carlo simulations
• Monte Carlo limitations
• Extreme Value theory
• Scoreboards
• Stress Testing
• Stress testing and Basel
• (AMA) Advantages / Disadvantages
• Recognition of the firms’ own modeling of operational risk losses
• "Weak banks", internal and external audit and sound practices for operational risk
• Self assessment
• Key Risk Indicators
• Operational Risk Measurement Issues
• The game theory
• The prisoner’s dilemma – and the connection with operational risk measurement and management
• Operational risk management
• Operational Risk Management Office
• Key functions of Operational Risk Management Office
• Key functions of Operational Risk Managers
• Key functions of Department Heads
• Internal and external audit
• Operational risk sound practices
• Operational risk mitigation
• Insurance to mitigate operational risk

Third-party service providers and vendors

• Redefining outsourcing
• Outsourcing after Basel II
• Offshore outsourcing
• Key risks of outsourcing
• What is needed from vendors and service providers

Basel II and other regulations

• Capital Requirements Directive (CRD)
• Markets in Financial Instruments Directive (MiFID)
• New standards
• Disclosure issues
• Multinational companies and compliance challenges