Financial Risk Management

This course is designed to train the participants in evaluating and managing risks using an enterprise-wide approach. Most of the course deals with financial risks. The course starts with an analysis of how risk management contributes to firm value. A general framework for how to use risk management to create value is presented next. The course then examines the measurement and management of market risks, cash flow risks for non-financial firms, interest rate risks, credit risks, and operational risks. The course turns next to the implementation issues of enterprise-wide risk management, showing how to aggregate risks across the firm and how to use a firm-wide risk measure to make various corporate decisions and to evaluate performance within the firm. The course finishes with a discussion of recent issues in risk management. Students have to be comfortable with Excel, Black-Scholes, and the CAPM to attend successfully; if you are not comfortable with these tools, you should not take the course. Risk management problems for financial intermediaries as well as for firms outside the financial sector are also examined. Students will learn how to manage financial risks through lectures, exercises, and cases. A major component of the course is a four-part case that covers all aspects of integrated risk management. At the completion of that case, students will have measured firm-wide risk for a financial institution.