Chartered Banker Institute Qualifications Strategy, Leadership and Bank Management Syllabus

What is the purpose of a bank's ICAAP (Internal Capital Adequacy Assessment Process)?

ICAAP is the firm's own forward-looking assessment of the capital it needs to cover all material risks (including those not fully captured by Pillar 1), incorporating stress testing, to ensure capital adequacy is maintained over the business plan horizon.

What is Return on Equity (ROE) and how does it relate to Return on Assets (ROA)?

$$\text{ROE} = \frac{\text{Net Income}}{\text{Shareholders' Equity}}, \quad \text{ROA} = \frac{\text{Net Income}}{\text{Total Assets}}$$ They are linked by the equity multiplier (leverage): $\text{ROE} = \text{ROA} \times \frac{\text{Assets}}{\text{Equity}}$.

What is RAROC and why do banks use it for performance measurement?

RAROC (Risk-Adjusted Return on Capital) relates risk-adjusted return to the economic capital at risk: $$\text{RAROC} = \frac{\text{Risk-Adjusted Net Income}}{\text{Economic Capital}}$$ It allows comparison of business lines on a like-for-like risk basis and supports capital allocation.

What is Economic Value Added (EVA) and when is value created?

$$\text{EVA} = \text{NOPAT} - (\text{Capital} \times \text{Cost of Capital})$$ Value is created when EVA is positive, i.e. when returns exceed the cost of the capital employed.

Contrast transformational and transactional leadership.

Transactional leadership motivates through exchanges — rewards, targets and corrective action for performance. Transformational leadership inspires followers to exceed expectations through vision, idealised influence, intellectual stimulation and individualised consideration, driving change and commitment.

What are the leadership styles in the Goleman (Hay/McBer) model of six emotional leadership styles?

Coercive (commanding), Authoritative (visionary), Affiliative, Democratic, Pacesetting and Coaching. Effective leaders flex between styles according to the situation.

What does situational leadership (Hersey-Blanchard) propose about adapting style?

Leaders should adapt style to followers' readiness/maturity, moving across four styles: Directing (S1), Coaching (S2), Supporting (S3) and Delegating (S4) as competence and commitment grow.

What are the five stages of Tuckman's model of team development?

Forming, Storming, Norming, Performing and Adjourning (mourning). Teams typically progress through conflict to cohesion and high performance.

According to Patrick Lencioni, what is the foundational dysfunction in 'The Five Dysfunctions of a Team'?

Absence of trust is the foundational dysfunction. It leads, in order, to fear of conflict, lack of commitment, avoidance of accountability and inattention to results.

What does Belbin's team roles theory contribute to building high-performing teams?

It identifies nine complementary behavioural roles (e.g. Plant, Coordinator, Implementer, Completer-Finisher, Monitor-Evaluator, Resource Investigator, Shaper, Teamworker, Specialist). Balanced teams cover all roles, improving effectiveness.

What are the eight steps of Kotter's change management model?

(1) Create urgency, (2) Build a guiding coalition, (3) Form a strategic vision, (4) Enlist a volunteer army/communicate, (5) Enable action by removing barriers, (6) Generate short-term wins, (7) Sustain acceleration, (8) Institute/anchor change in the culture.

What does Lewin's three-stage change model describe?

Unfreeze (prepare and motivate for change by challenging the status quo), Change/Move (implement the new ways of working), and Refreeze (embed and stabilise the new state as the norm).

What is the purpose of stakeholder mapping using a power/interest grid?

It classifies stakeholders by their power and level of interest to determine engagement strategy: Manage Closely (high power, high interest), Keep Satisfied (high power, low interest), Keep Informed (low power, high interest) and Monitor (low power, low interest).

Distinguish diversity, equity and inclusion (DEI).

Diversity is the presence of difference (e.g. gender, ethnicity, age, background). Equity is fair treatment, access and opportunity, adjusting for differing needs. Inclusion is a culture where diverse people feel valued, respected and able to participate fully.

What is the difference between equality and equity in a DEI context?

Equality gives everyone the same resources/treatment regardless of circumstances. Equity allocates resources according to individual needs so that everyone can achieve comparable outcomes, recognising different starting points.

What is the primary role of a bank's board of directors?

To provide collective strategic direction, oversight and control — setting strategy and risk appetite, appointing and monitoring senior management, ensuring effective risk management and internal control, and safeguarding stakeholders' interests and the firm's long-term success.

What is the difference between an executive and a non-executive director (NED)?

Executive directors are full-time members of management with day-to-day operational responsibilities. Non-executive directors are not part of management; they provide independent oversight, challenge and judgement, and chair key committees such as audit and remuneration.

What is the 'three lines of defence' model of risk governance?

First line: business operations that own and manage risk. Second line: risk management and compliance functions that set frameworks and oversee/challenge. Third line: internal audit providing independent assurance to the board.

What are the principal board committees typically required in a bank, and their roles?

Audit Committee (financial reporting integrity, internal controls, external audit), Risk Committee (risk appetite and oversight), Remuneration Committee (pay policy) and Nomination Committee (board composition and succession).

What does 'risk appetite' mean at board level?

The aggregate level and types of risk a firm is willing to assume in pursuit of its strategic objectives, set by the board and cascaded through limits and tolerances to guide decision-making and control.

What is 'clawback' in remuneration governance, and how does it differ from 'malus'?

Malus reduces or cancels unvested/deferred variable pay before it is paid out. Clawback recovers variable remuneration that has already been paid/vested, typically following misconduct, material risk failures or a misstatement of results.

Why do regulators require deferral of variable remuneration for material risk takers?

To align pay with the long-term time horizon over which risks crystallise, discourage excessive short-term risk-taking, and allow malus/clawback to be applied if risks or misconduct later emerge.

What does Carroll's CSR pyramid identify as the four levels of corporate social responsibility?

From base to top: Economic responsibilities (be profitable), Legal (obey the law), Ethical (do what is right and fair) and Philanthropic (be a good corporate citizen, contribute to the community).

What is meant by an organisation's 'purpose' in the context of purpose-driven banking?

The fundamental reason a bank exists beyond profit — the contribution it seeks to make to customers, society and the economy — which guides strategy, culture and decision-making and helps rebuild trust and long-term value.

What is 'platform banking' / Banking-as-a-Service (BaaS)?

A model where a bank exposes its products, accounts and infrastructure via APIs so that third parties (fintechs, retailers) can embed banking services into their own offerings. It can turn the bank into a platform orchestrating multiple providers and customer journeys.

What is Open Banking and on what regulatory basis does it operate in the UK/EU?

Open Banking allows customers to share their bank data securely with authorised third parties via APIs, enabling account information and payment initiation services. It is underpinned by the EU PSD2 (and the UK's CMA Open Banking remedy).

Distinguish descriptive, predictive and prescriptive analytics in banking.

Descriptive analytics explains what has happened (reporting). Predictive analytics forecasts what is likely to happen (e.g. credit default models). Prescriptive analytics recommends what action to take to achieve a desired outcome (optimisation).

Give three common applications of AI/machine learning in banking.

Examples: credit scoring and underwriting; fraud detection and anti-money-laundering monitoring; customer service chatbots/virtual assistants; algorithmic trading; personalisation; and process automation (RPA). Any three are valid.

What does the 'CIA triad' represent in cyber security?

Confidentiality (data accessible only to authorised parties), Integrity (data is accurate and unaltered) and Availability (systems and data are accessible when needed). These are the three core objectives of information security.

What is 'operational resilience' as defined by UK regulators?

The ability of a firm to prevent, adapt, respond to, recover from and learn from operational disruptions to its important business services, staying within defined impact tolerances so that harm to consumers and market integrity is avoided.

Name three emerging trends reshaping the future of banking strategy.

Examples: embedded finance and platform/ecosystem models; central bank digital currencies (CBDCs) and digital assets/tokenisation; generative AI; ESG and climate-related financial risk and sustainable finance; and increasing competition from fintechs and big tech. Any three are valid.