How your selected bank designs and implements an Enterprise Risk Management (ERM) framework, including governance, risk appetite, and risk culture Assignment Brief Module Code
AF6037/LD6078
Module Title
Risk in Financial Institutions II
Statement of task
This assessment invites you to address the following task:
This assessment requires you to produce an individual 3,000-word report analysing risk management within a Global Systemically Important Bank (G-SIB). Using the bank’s latest Annual and Pillar 3 reports, supported by academic literature and regulatory guidance, you must critically evaluate how the bank manages interest rate, foreign exchange, operational, and fraud risks within an enterprise risk management framework, and assess how these risks interact and contribute to systemic risk.
Word Limit
The total word limit for this assessment is 3000 words.
Weighting
This assessment is worth 100% of the total marks available for this module
Provision of feedback
Written and audio feedback will be provided by Thursday 11th June
Guidance for this assessment To answer the questions below, you must select ONE Global Systemically Important Bank (G-SIB). Your analysis must draw explicitly on the bank’s most recent Annual Report and Pillar 3 disclosures, supplemented by academic literature and regulatory guidance.
Across both questions, you are required to demonstrate:
How your selected bank designs and implements an Enterprise Risk Management (ERM) framework, including governance, risk appetite, and risk culture
How the risks discussed interact with each other and contribute to systemic risk
Critical engagement with international regulatory frameworks (e.g. Basel III/IV, BCBS, macroprudential regulation)
Question 1: Interest Rate, FX and Systemic Risk (1500 words – 50 marks) In the context of international regulatory frameworks and systemic risk management, critically evaluate the effectiveness of the measurement and management techniques employed by your selected bank’s Asset–Liability Committee (ALCO) in managing interest rate risk and foreign exchange risk.
In your answer, you should:
Forecast the interest rate and foreign exchange environment for your chosen bank to inform how your bank should manage their exposure
Evaluate the risk measurement techniques your bank employs or should employ
Analyse how ALCO decision-making translates into practical balance sheet and hedging strategies for risk management
Examine how interest rate and FX risks interact, particularly under stressed market conditions, and how these interactions may amplify systemic risk
Assess the role of regulatory requirements and supervisory expectations (e.g. IRRBB, Basel III, macroprudential oversight) in shaping the bank’s risk management approach
Question 2: Operational and Fraud Risk within an ERM Framework (1500 words – 50 marks) Using academic literature and regulatory risk guidelines, critically assess the operational risk management performance of your selected bank in the current dynamic banking environment. Additionally, develop a forward-looking fraud risk assessment informed by real-world cases and emerging risk exposures.
In your answer, you should:
Critically evaluate the sources and materiality of operational risk, with examples from your bank (this can be a table).
Assess the bank’s operational risk measurement and management approaches, with reference to regulatory frameworks
Develop a fraud risk assessment table, drawing on:
Real-world fraud or misconduct cases relevant to the bank or sector
Established fraud theories and frameworks
Regulatory and professional guidance on fraud risk management
Critically discuss how digitalisation, globalisation, and regulatory change may shape the bank’s future fraud and operational risk exposure
The assessment structure guidelines are as follows:
Your assignment can be in the form of a report, but you should not separate all the individual risks.
Length maximum of 3000 words (with a +/- 10% tolerance level) must be stated.
Font – Arial 12, the whole document being fully justified with 1.5 line spacing.
Titles and headings should be in bold. Section headings should be numbered, e.g. 3.1.
Quotations of more than two lines must be indented and in italics with the reference and page number stated. Shorter quotes should be in italics but do not need to be indented.
Tables and figures should be inserted at an appropriate point in the text and should be easily readable.
No large tables, except a detailed fraud risk framework.
If you are attaching any appendices, please keep them to a minimum.
Referencing must be APA 7th style.
Rubric – Grading criteria for the Assessment You should refer to these assessment criteria within this rubric for detailed guidance on how you will secure marks for this assessment
Question 1- Interest Rate Risk, FX Risk, ALCO and Systemic Risk Mark Band
Descriptor
0–29% (Unsatisfactory)
Does not meet Standards
Shows little or no understanding of interest rate risk, FX risk, ALCO, or regulatory frameworks. Content is largely irrelevant, descriptive, or incorrect. Fails to engage with the selected bank’s reports. No evidence of ERM, systemic risk, or risk interaction. Significant conceptual errors and/or extremely poor academic standards.
30–39% (Insufficient) Does not meet Standards
Limited understanding of interest rate and FX risk with significant omissions or inaccuracies. Minimal reference to ALCO or regulation. Use of the bank’s disclosures is weak or superficial. Lacks critical analysis and fails to meaningfully discuss ERM or risk interaction. Structure and academic referencing are poor.
40–49% (Adequate attempt) Meets Standards
Demonstrates a basic understanding of interest rate and FX risk and refers to relevant regulatory frameworks. Some use of the bank’s Annual or Pillar 3 reports, though analysis is largely descriptive. Limited evaluation of ALCO effectiveness. ERM and systemic risk are mentioned but not well integrated. Risk interaction is underdeveloped.
50–59% (Good) Meets Standards
Shows a good understanding of interest rate and FX risk measurement and management. Provides relevant discussion of ALCO structures and regulatory requirements. Uses bank disclosures appropriately. Some critical evaluation is evident, though analysis may lack depth in places. ERM and risk interactions are addressed but not fully synthesised.
60–69% (Very good) Meets Standards
Demonstrates strong understanding and critical evaluation of ALCO risk management practices, including measurement techniques and regulatory constraints. Effective use of bank disclosures and academic literature. Clear discussion of ERM and interaction between interest rate, FX, and systemic risk. Well-structured, coherent, and analytically sound.
70–79% (Excellent) Exceeds Standards
Provides a highly critical and well-integrated analysis of interest rate and FX risk management within an ERM framework. Strong evaluation of ALCO effectiveness, regulatory influence, and systemic risk implications. Risk interactions are clearly explained and supported with evidence. Excellent use of literature and disclosures.
80–100% (Outstanding) Exceeds Standards
Exceptional, original, and insightful analysis demonstrating mastery of interest rate, FX, and systemic risk management. Sophisticated critique of ALCO decision-making and regulatory frameworks. Seamless integration of ERM and risk interactions, including stress and systemic perspectives. Outstanding academic rigour, clarity, and depth throughout.
Question 2- Operational Risk and Fraud Risk within an ERM Framework Mark Band
Descriptor
0–29% (Unsatisfactory)
Does not meet Standards
Shows little or no understanding of operational or fraud risk. Fails to engage meaningfully with academic literature, regulatory guidance, or the selected bank’s disclosures. No coherent fraud risk assessment. ERM, governance, and systemic implications are absent. Serious conceptual and academic shortcomings.
30–39% (Insufficient) Does not meet Standards
Limited understanding of operational and fraud risk with significant gaps or inaccuracies. Minimal use of literature or regulatory frameworks. Fraud risk assessment is weak, generic, or unsupported. Poor integration with ERM and little awareness of risk interaction or future exposures.
40–49% (Adequate attempt)
Meets Standards
Demonstrates basic understanding of operational risk and fraud risk concepts. Some reference to literature, regulation, and bank disclosures, though analysis is largely descriptive. Fraud risk assessment lacks depth and forward-looking insight. ERM integration and risk interaction are limited.
50–59% (Good) Meets Standards
Shows good understanding of operational risk management practices and regulatory expectations. Appropriate use of academic literature and bank disclosures. Fraud risk assessment is relevant but may lack sophistication or originality. ERM and governance structures are discussed with some critical insight.
60–69% (Very good) Meets Standards
Provides a strong critical assessment of operational risk management performance using literature, regulation, and bank data. Fraud risk assessment is well-developed, forward-looking, and grounded in real-world cases. Clear integration within ERM and recognition of risk interdependencies.
70–79% (Excellent) Exceeds Standards
Offers a highly analytical and well-evidenced critique of operational and fraud risk management within an ERM framework. Fraud risk assessment demonstrates depth, foresight, and strong theoretical grounding. Excellent synthesis of regulation, governance, digitalisation, and systemic risk.
80–100% (Outstanding) Exceeds Standards
Exceptional and insightful evaluation demonstrating expert-level understanding of operational and fraud risk. Original, forward-looking fraud risk assessment supported by theory, regulation, and real-world cases. ERM integration and systemic risk implications are exceptionally well articulated. Exemplary academic quality throughout.
Assessment Guidance Session Detailed assessment guidance will be given in Week 1 Seminar. The seminar will provide advice on
Assessment Expectations
Differences between the SIFI banks and when their reports are available
How we will work on the assessment during the semester
How the assessment will be graded against the rubric
You are reminded that recorded assessment guidance will be provided on the eLP Blackboard site for this module after Week 1.
Use of Generative AI within this Assessment
In alignment with Northumbria University’s Academic Regulations for Taught Awards (ARTA), section 1.2, you are reminded that “In all assessed work students should take care to ensure that the work presented is their own and that it fully acknowledges the work and opinions of others”.
Unless the assessment specific guidance above requests that you use generative AI in crafting your assessment, AI should not be used to do the core work for you. You should assume that generative AI may be used as follows:
AI can help with things like improving grammar, helping with structure format, organising ideas, and generating suggestions.
The main content, analysis, and conclusions in your work must always be your own work
Further guidance regarding using AI responsibly and ethically can be found in your student portal here.
When you submit your assessment, you will be requested to add and sign a declaration of your use of AI in the creation of your work. A copy of this declaration document is attached to the end of this document. You should place this signed copy at the front of your submission. Failure to accurately record your use of such tools may be considered as academic misconduct.
Academic Regulations As part of the preparation for writing your assessment, you should familiarise yourself with the following policies, all of which can be found here:
Academic Regulations for Taught Awards (ARTA)
Academic Misconduct
Word Limit
Late Submission of Work
Short Extensions
Personal Extenuating Circumstances (PEC)
Technical Extenuating Circumstances (TEC)
Please see the module Blackboard site/eLP for further details of how the University Assessment Regulations may affect/support you.
Assessment Submission Coversheet If you do not understand any elements of this declaration, please speak to your module tutor.
Module code and title
AF6037/LD6078 Risk in Financial Institutions II
Student Name:
Student ID:
Total Word Count:
Declaration of that the submission is your own work
I confirm that:
This assignment submission is my own, independent work.
I have referenced the sources of information, ideas, and quotations that I have used in this submission and listed my sources in a bibliography.
Declaration of the Use of AI tool
EITHER
I have not used AI at any point in preparing this assessment
OR
I have used AI tools (including, but not limited to ChatGPT) to help me (select all that apply):
Generate initial ideas in response to the question
Develop the structure
Generate ideas for examples / sources
Provide feedback and suggestions for improvement on my content
Edit and improve my spelling and grammar
Other: please explain:
I have completed a reference declaration statement as part of my reference list showing which AI tools I have used and how I have used them.
In completing this declaration, I confirm that I have NOT used AI to generate whole sentences, paragraphs, sections, or the whole of this assessment and I understand that this would be considered academic misconduct.
Signed:
(electronic signature is accepted)