Module BUSI4H415: FINANCIAL RISK MANAGEMENT (TAUGHT)

Department: Management and Marketing

BUSI4H415: FINANCIAL RISK MANAGEMENT (TAUGHT)

Tied To

• N1KR17: Business Administration (Finance) (Global) (for students entering between Oct 2010 - Apr 2013) (see Postgraduate Handbook 2016-2017 for details)
• N1N317: Business Administration (Finance) (Global) (for students entering between Oct 2013 - Apr 2015) (see Postgraduate Handbook 2018-2019 for details)

Pre-requisites

Corequisites

Excluded Combinations

Aims

• To build on the core module 'Managing Finance' by providing students with the advanced knowledge needed to understand the strategies proposed by specialist practitioners in the field (e.g. corporate treasurers), and the skills to contribute to discussions of risk management up to board level.

Content

• Introduction. Return-Risk tradeoffs. Efficient frontier. CAPM model
• Trading in markets. Short selling. Plain Vanilla derivatives: Forwards, futures, swap and options.
• How traders manage risks using parameters such as Delta, Gamma etc.
• Interest rate risk. Duration and convexity of bonds.
• Value at Risk (VaR). Expected shortfalls (ES). Difference between ES and VaR.
• Credit risk. Credit default swaps (CDS).
• Volatility.

Learning Outcomes

• By the end of the module students should have a critical understanding of:
• institutional aspects of generic bonds, bills, forwards, futures, swaps and options (‘financial derivatives’ henceforth);
• general techniques used in the valuation of financial derivatives;
• hedging techniques using structured financial derivatives;
• computational methods for financial risk assessment and management.

• By the end of the module students should be able to:
• identify and evaluate the principal financial risks faced by a large company;
• apply techniques of asset portfolio management, with particular emphasis on bond and bill portfolios;
• identify and evaluate the methods by which those risks can be managed, and the extent to which such methods should be used;
• devise and propose credible financial risk management strategies based on a range of generic, and structured, financial derivatives;
• critically assess financial risk management strategies proposed by a company’s risk management practitioners.

• Written communication;
• Planning, organising and time management;
• Problem solving and analysis;
• Using initiative;
• Computer literacy.

Modes of Teaching, Learning and Assessment and how these contribute to the learning outcomes of the module

• The module is delivered over three days using a workshop format (combining taught input, groupwork, case studies and discussion as appropriate).
• The formative assessment will be in the form of group work after each topic to practise the techniques covered. The group work is an opportunity for self-assessment and peer-to-peer learning, and tutors will provide feedback to ensure the learning outcome of the topic is achieved.
• The summative assessment of the module is designed to test the acquisition and articulation of knowledge and critical understanding, and skills of application and interpretation within the business context.

Teaching Methods and Learning Hours

Summative Assessment

Formative Assessment

Group work on which feedback will be provided.