This module is not currently running in 2024 to 2025.
The module begins with motivations for risk management in general and then covers the practice of risk management. In particular, students are introduced to the current thinking on governance and regulatory systems, followed by industry practices for managing certain common types of risk. Critical evaluation of these practices is incorporated where applicable.
Topics covered in this module include:
- Introduction to general risk management theory, how and why it generates value
- A taxonomy of risks, including Market Risk, Credit Risk, Liquidity Risk, Operational Risk, Model Risk, Regulatory Risk, Legal/Contract Risk, Tax Risk, Accounting Risk, and Political Risk.
- Introduction to Governance and Regulation
- Standard measures of risk
- Risk measurement for security portfolios
- Hedging techniques using financial derivatives
- Evaluation of hedging performance
The module will be taught by lectures, seminars, terminal sessions and private study.
Total Contact Hours: 32
Private Study Hours: 118
Main assessment methods
Exam – two hour, unseen, closed book: 70%
Group Quantitative Project - 2000 words 20%
Individual Report - 500 words: 10%
Reassessment methods
Reassessment will be on a like-for-like basis.
• Christoffersen, P. F., (2012). Elements of financial risk management, 2nd edn. Oxford: Academic Press
• Hull, J. C. (2015). Risk management and financial institutions, 4th edn. Hoboken, NJ: Wiley
See the library reading list for this module (Medway)
The intended subject specific learning outcomes.
On successfully completing the module students will be able to:
- Demonstrate critical knowledge and systematic understanding of the overall context of, the need for, and good practices in risk management in professional financial practice and in business organisations
- Demonstrate critical knowledge and systematic understanding of risk assessment methodology, specifically risk measurement techniques based on financial and statistical models related to a variety of markets.
- Demonstrate critical knowledge and systematic understanding of risk management techniques for different types of risk, with and without the use of derivative securities.
- Identify hedging, speculation and arbitrage, communicate effectively quantitative estimates of risk, and efficiently implement quantitative methods for risk measurement on real-world data.
The intended generic learning outcomes.
On successfully completing the module students will be able to:
- Explain and summarize complex concepts in a non-technical manner.
- Think conceptually and critically analyse situations involving uncertainty.
- Understand some of the challenges involved in linking theory and real-world practice, and the need to recognise the complexity of situations by qualifying one's conclusions.
- Approach problems positively using numerical and quantitative approaches.
- Source, plot, analyse and present data.
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