Basel Regulations Simulation

In this simulation participants step into the role of a bank’s senior risk and compliance team navigating the requirements of Basel III (and its evolving framework) and apply them in a competitive, decision-based scenario.

Basel Regulations Simulation Overview

Participants take charge of banking institutions operating under regulatory scrutiny. The simulation replicates a series of rounds in which they must manage capital, liquidity and leverage while responding to shocks, regulatory updates and competitive pressures.

Each team is responsible for managing transactions and resources while obliging to Basel’s regulations. Scenarios will evolve: credit cycles, market stress, regulatory cliff-events, and peer competition.

During the simulation “news events” (sector shocks, regulatory changes, competitive earnings surprises) are introduced at key moments which force participants to revise their multiples and assumptions. It helps participants internalize the logic and pitfalls of peer-based valuation in a dynamic environment. Simulation pushes participants to see and recognise reasoning for those regulations and the need to adhere to them.

Basel Regulations Simulation Concepts

Participants work through realistic scenarios, which can be customized to emphasize or exclude specific topics depending on the learning goals. This modular structure allows the simulation to be tailored to any type of session. Key concepts include:

Common Equity Tier 1 capital, Tier 1 capital, Total capital ratios and how they relate to risk-weighted assets
Leverage ratio and its role as a back-stop to risk-weighted measures
Liquidity standards: Liquidity Coverage Ratio and Net Stable Funding Ratio
Macro-prudential dimension of regulation and capital buffers
Risk-weighted asset calculation
Stress testing, business model resilience, regulatory implementation timeline

Gameflow

What Participants Do

In the simulation, participants will:

Analyse the bank’s business model, risk profile and regulatory baseline
Calculate and simulate compliance with Basel ratios under various scenarios
Make strategic decisions: raise capital, shrink or re-allocate RWAs, adjust business lines, alter funding mix, hedge or reduce exposures
Respond to regulatory updates or surprise events
Communicate decisions internally under time pressure
Compare performance across rounds/teams: measure how well banks stay compliant while maintaining profitability, competitiveness and growth
Reflect and debrief: review outcomes, discuss which strategies succeeded or failed, and link decisions to regulatory mechanics

Learning Objectives

By the end of the simulation, participants will be able to:

Understand the nature of uncertainty and how executives must make decisions without full information
Apply scenario-planning and adaptive thinking in strategic leadership contexts
Make resource allocation decisions that balance growth, risk and resilience
Detect early signals of disruption or competitive shifts and respond appropriately
Communicate strategic choices and rationale clearly to diverse stakeholders under pressure
Learn how to pivot strategy dynamically in response to new data or environmental changes
Build confidence in leading through ambiguity, not just in stable environments
Enhance collaboration across functions (strategy, operations, finance, communications) under uncertain conditions
Use feedback loops (metrics, outcomes) to refine decisions and close the “learning loop”

The simulation’s flexible structure ensures that these objectives can be calibrated to match the depth, duration, and focus areas of each program, whether in higher education or corporate learning.

How the Basel Regulations Simulation Works

This simulation can be run individually or in teams in academic or corporate contexts.

1. Make Financial Decisions Teams choose strategic moves (capital raise, business reduction, funding shift, hedging) under defined constraints and timing.

2. Respond to Shock Events The system introduces regulatory change or stress forcing teams to react.

3. Update your Strategy Accordingly The simulation calculates updated ratios, profitability, risk exposures and gives performance summaries.

4. Prepare and Present a Memo Teams prepare a board/ investor memo or regulatory submission based on their decisions and outcomes.

5. Review Performance Participants review performance, identify learning points, adjust their strategy, and begin the next round with updated context.

Frequently Asked Questions

Do participants need prior knowledge of banking regulation or Basel standards? No deep expertise is required. Basic familiarity with banking concepts (capital, liquidity, risk) helps, but the simulation provides instructional support and builds from foundational to advanced levels.
How long does the simulation run? The duration is flexible, it can be delivered in a 3-4 hour module for introductory exposure, or extended into a full day or multi-round session for deeper engagement.
Is the simulation individual or team-based? Both formats are supported. Teams mimic real-life banking work-groups (risk/compliance/treasury) whereas individuals can represent small banks or solo roles.
Can the simulation be customised to specific regulatory jurisdictions or business models? Yes, scenarios can be tailored to reflect regional regulatory frameworks, size of institution (retail bank, investment bank, regional vs global), or emphasise particular topics (e.g., liquidity stress, systemic-importance buffers).
Are real-world data or bank case studies used? The simulation uses realistic datasets, benchmark metrics and scenarios modelled on actual regulatory frameworks (Basel III, Basel “Endgame”) and stress-testing outcomes.
How is performance measured and assessed? Performance is evaluated on compliance (capital/leverage/liquidity ratios), business outcomes (profitability, growth), strategic resilience (ability to absorb shocks) and communication (clarity of stakeholder messaging). Facilitator tools enable peer and self-assessment.
Who is this simulation designed for? It’s ideal for finance students (undergraduate, MSc, MBA), banking professionals (risk, compliance, treasury, strategy), training programmes for regulators or bank executives and corporate workshops focusing on financial stability, risk & regulation, although it can be tailored to any other field.

Assessment

Following the simulation, participants are assessed on multiple dimensions:

Compliance to the regulatory metrics
Ability to effectively strategise under pressure
Flexibility in face of shock events
Clarity and quality of investor/board/regulator memos or presentations.
Depth and logic of scenario analysis and sensitivity ranges
Rating by peers and self-reflection on approach and decisions (optional)

Assessment can combine numeric scoring, qualitative feedback, peer review, and instructor debriefing. This flexibility allows the simulation to serve both graded university courses and corporate finance training environments.