The evolvement of financial instruments and markets has enabled banks to undertake varied risk exposures. Capital maintained by a bank under new Basel Capital Accord will be more closely aligned
to the risks undertaken and NRB moved towards risk-based supervision (RBS) of banks. A sound internal audit function plays an important role in contributing to the effectiveness of the internal control system. The audit function should provide high quality counsel to management on the effectiveness of risk management and internal controls including regulatory compliance by the bank.
There is a need for widening as well as redirecting the scope of internal audit to evaluate the adequacy and effectiveness of risk management procedures and internal control systems in the banks. To achieve these objectives, banks will have to gradually move towards risk-based internal audit (RBIA) which will include, in addition to selective transaction testing, an evaluation of the risk management systems and control procedures prevailing in various areas of a bank’s operations. The course begins with the basic understanding of what credit risk is and how it arises in many real business cases. The course looks at
a range of quantitative techniques which are employed by class leading models.
