Financial Risk Management
SYLLABUS MAN 6122
FINANCIAL RISK MANAGEMENT
3 CREDIT UNITS
Risk is costly, particularly to executives and business owners facing inherent risk in their professional lives. Optimizing the cost of risk would increase the value of a firm. However, risk minimization, either by the self-managed method or by the risk-transfer approach, is not a trivial process to implement. If an executive decides to manage the cost of risk herself, she has to estimate direct and indirect costs pertaining to possibly risky events or occurrences. On the other hand, if the executive transfers the risk to a third party, she has to load in insurance premium as compensation for the insurer, comprised of administrative fees and the insurer’s business return.
Hence, financial risk management course is of importance for dealing with business and professional lives. This course is designed to introduce and discuss various risk management concepts, tools, and techniques in a global context. Using an integrated approach, this course emphasizes discussion on the design and implementation of risk management practices. Accordingly, it purports to help students understand and carry out various state-of-the-art risk management theories and practices as well as their future advances (such as loss control, loss financing, and internal risk reduction mechanisms).
Upon completion of this course, the student should be able to:
- Understand the comprehensive perspective on risk management and insurance concepts, tools, and
- Develop analytical and integrative thinking in understanding and implementing risk management
- Increase their aspirations through an experiential approach, especially in the completion of
- Practice communication skills intertwined with risk management topics; and
- Enhance their creativity.
- Saunders, A. and Cornett, M. (2014). Financial Institutions Management: A Risk Management Approach, 8th Edition. McGraw-Hill, Boston, MA. (SC)
ADDITIONAL READING MATERIALS
- Additional materials will be distributed during the sessions.
This method is a particular type of learning methods under the student-centered learning (SCL) paradigm. In this approach, students are active learners to find and construct their own knowledge. The instructor serves only as a facilitator to help students achieve learning objectives and develop interpersonal skills. The class time will be devoted to discuss any concepts, materials, and or issues in the subject.
- Mid-term Exam (25%)
- Final Exam (25%)
- Presentation, Discussion, Participation (30%)
- Assignment and Quiz (20%)
The course Financial Risk Management weighs 3 credit units which is held in 14 sessions of lectures and 2 sessions of exams @ 150 minutes for regular class and 12 sessions of lectures and 2 sessions of exams @ 180 minutes for the executive class.
Risk management overview
|2||Why are financial institutions special? Risks of financial institutions||SC (Ch. 1)
SC (Ch. 7)
|3||Case 1||SC Ch. (2-6)|
|4||Interest rate risk||SC (Ch. 8)|
|5||Interest rate risk||SC (Ch. 9)|
|6||Credit risk||SC (Ch. 10-11)|
|8||Liquidity risk, Sovereign risk||SC (Ch. 12, 14)|
|9||Foreign exchange risk, Off-balance-sheet risk||SC (Ch. 13, 16)|
|10||Market risk, Technology and other operational risks||SC (Ch. 15, 17)|
|11||Insurance Case 4||SC (Ch. 19)
|12||Futures and forwards
Options, caps, floors, and collars
|SC (Ch. 22)
SC (Ch. 23)
|13||Swaps Securitization||SC (Ch. 24)
SC (Ch. 26)