CENTRAL BANK OF KENYA
Remarks by
PROF. NJUGUNA NDUNG’U
GOVERNOR
THE LAUNCH OF RISK CERTIFICATION PROGRAMME
CONDUCTED BY KSMS IN COLLABORATION WITH GLOBAL
ASSOCIATION OF RISK PROFESSIONALS (GARP)
Kenya School of Monetary Studies
Friday, November 8, 2013

Distinguished Guests;
Ladies and Gentlemen:
1. It gives me great pleasure to be here today to officially
welcome you all to the launch of the Risk Certification
Programme conducted by the Kenya School of Monetary
Studies in collaboration with the Global Association of
Risk Professionals (GARP). On behalf of the Central Bank
of Kenya (CBK), let me extend a very warm welcome to all
the Organizations represented here today.
2. The School, through its international networks, has
established a collaborative partnership with GARP to offer
a Flagship Risk Management Certification Programme
(RCP) that seeks to professionalize Risk Management in the
financial sector in Kenya and the region. In this
collaborative arrangement, KSMS is leveraging the
expertise GARP has developed over the years in delivering
globally recognized professional risk education and
certification. This collaboration provides an opportunity
for KSMS and participants to tap into a wide network of
financial expertise on a global platform. As a sector, we
sincerely appreciate GARP‟s initiative and mission to
advance risk profession through education, training and

promotion of best practice and we are proud to be
associated with GARP.
Further, colleagues, it is important to note that the RCP we
are launching here today is a culmination of continuous
efforts by Kenya School of Monetary Studies towards
developing relevant and practical solutions for the region.
3. The launch of the “Risk Certification Programme” by
GARP and KSMS comes at an opportune moment for the
Financial Sector. Many of you would know and agree that
we are increasingly progressing in various areas as a sector.
Companies face risks every day; they are part of normal
business life. In a climate where undesirable events and
missed opportunities may impact on profits and
shareholder value, it is crucial to strike the right balance
between risk adversity and conscious risk-taking. To do
this, it is essential to understand the complex picture of
not only financial but also technological, environmental
and social risks relevant to organizations we all work for.
4. Ladies and Gentlemen: The KSMS-GARP's curriculum we
are launching here today is designed to give candidates a
deeper understanding of why and how financial risks

impact financial assets, institutions and systems, and
ultimately, the global financial infrastructure.
5. Ladies and Gentlemen: As Kenya and the region at large
become an increasingly attractive destination for
investments, the onus is on you, the financial industry
players and financial institutions to tap into this
tremendous potential of the Risk Certification program in
growing the much needed technical capacity. The road
won‟t be an easy one and the industry must overcome
certain challenges which include lack of certified Risk
Management professionals, emerging legal and regulatory
frameworks and most importantly the lack of awareness by
the majority of consumers.
6. GARP's academic partnerships with KSMS will play a
critical role in educating the next generation of qualified
risk managers. By working with KSMS to combine rigorous
academic instruction with practitioner-driven insight and
certification, students can be better prepared to succeed in
the challenging field of risk management.
The KSMS-GARP's Academic Outreach team stands ready
to:

Develop and enhance undergraduate and graduate-level
risk curricula
Incorporate professional certification into academic
programs
Increase recognition and visibility of approved
risk programs
Provide opportunities to participate as a GARP
Continuing Professional Education provider
Promote risk management as a profession and an
academic discipline
7. Ladies and Gentlemen: In accordance with the Basel Core
Principles for Effective Banking Supervision, „Risk
Management Processes‟ require that banks and banking
groups must have comprehensive risk management
processes (including Board and senior management
oversight) to identify, evaluate, monitor and control or
mitigate all material risks and to assess their overall
capital adequacy in relation to their risk profile. These
processes should be commensurate with the size and
complexity of the institution.
It is therefore a requirement that each institution prepare
a comprehensive Risk Management Programme (RMP)

tailored to its needs and circumstances under which it
operates and establish a Risk Management Function that
supervises overall risk management. The function should
be independent from those who take or accept risks on
behalf of the institution and should report directly to the
Board or a Committee of the Board.
The risk management function is responsible for ensuring
that effective processes are in place for:
i. Identifying current and emerging risks;
ii. Developing risk assessment and measurement systems;
iii. Establishing policies, practices and other control
mechanisms to manage risks;
iv. Developing risk tolerance limits for Senior
Management and Board approval;
v. Monitoring positions against approved risk tolerance
limits; and
vi. Reporting results of risk monitoring to Senior
Management and the Board.
It is for this reason that I strongly recommend this
programme for purposes of Banks institutionalizing strong
risk management programs. One sure way of achieving this
is through education and training of staff to upscale their
knowledge and risk management skills in response to the

ever evolving demands. It is my sincere hope that this RCP
Programme will create a culture of risk awareness,
professionalize Risk Management and uplift banking
systems in the financial sector.
8. Ladies and Gentlemen: Risk identification and assessment
are critical ingredients for an effective operational risk
management system. Effective risk identification considers
both internal and external factors. Sound risk assessment
allows the bank to better understand its risk profile and
target risk management resources and strategies most
effectively. Further Risk Management professionals
continue to face rising expectations. Senior management,
boards of directors, investors and internal stakeholders
demand more information from Risk Management
departments than ever before. Specifically, boards have
increased their scrutiny of risk management, which has
motivated Risk Management departments to contemplate
best practices around quantifying financial risk and
maintaining compliance.
Financial institutions that get their staff through this
program will have the reward of employees who have an
enterprise-wide understanding of risk with enhanced

ability to understand customer risk profiling and
subsequent appropriate pricing of credit products and
other financial services offered to specific clients. We
anticipate that this approach will help lower the cost of
credit and offer other financial services, improve access to
banking services and ultimately contribute to the overall
stability of the banking system.
9. Ladies and Gentlemen: Many of the current approaches to
managing emerging risks do not provide companies with
the information they need to act on insights from risk
data. This is because many key decision makers receive
information about emerging risks on an inconsistent basis
that makes it difficult for them to evaluate changes that
have occurred from one period of time to the next or to be
informed of emerging external trends in the marketplace.
Going forward, I hereby do challenge executives to focus on
developing the analytical capacity and tools to understand
the potential business impact of emerging risks on their
corporate performance. At a time of systemic uncertainty
and volatility, we hope this programme we are launching
here today assists your management team in developing the

critical capability of transforming risk data into business
insights for risk-adjusted decision making.
10. Ladies and Gentlemen, let me take this early
opportunity to inform you of the Central Bank‟s strategic
plan to take training and capacity building to the next
level. Currently, the Central Bank of Kenya, in
consultation with the KSMS is developing a framework
that seeks to provide minimum standards of professional
training and education for banking sector employees. It is
anticipated that these guidelines will ensure that training
and capacity building programs address specific knowledge
and competency requirements in core areas of banking.
Draft guidelines once ready, will be shared with industry
stakeholders for appropriate comments before adoption.
11. With these few remarks, Ladies and Gentlemen, it is
now my honour and pleasure to launch the Risk
Certification Programme.
I wish all trainees success in your learning process towards
Risk Management Certification.
Thank You and God bless you all