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Financial risk management is the process by which financial risks are identified, assessed, measured, and managed in order to create economic value. The financial turmoil during the 2008 crisis showed how crucial risk management is. Some risks can be measured reasonably well. For those, risk can be quantified using statistical tools to generate a probability distribution of profit and losses. Other risks are not amendable to formal measurement but are nonetheless important. As a consequence, the function of the risk manager is to evaluate financial risk using both quantitative tools and judgment.
This course provides the core knowledge for financial risk managers. The course contains four parts. First, the importance of risk management will be discussed primarily through the financial crisis starting in 2008. In the second part, students become acquainted with the financial markets and its instruments, as these are the primary tools of a risk manager. For example, they get used to the practice and pricing of derivative instruments such as forwards, options, or swaps. Third, they learn and practice the basics of managing market risks such as interest rate or commodity price risks. In the fourth part, the measurement and management credit risk, i.e. the potential failure of a counterparty, will be covered.
This course is not only useful for future risk managers since it is useful for all kind of management positions, it helps to analyze new projects, new ventures, mergers, and acquisitions, it provides you with an advanced understanding of financial instruments and it helps to manage investments portfolios. |
