The course focuses on the risk management challenges that managers face in our current turbulent times. Managers not only need to be equipped with the latest tools of risk management but also be ready to face the unknown risks. The 2008 global crisis and the 2020 Covid pandemic had never-experienced-before ramifications to the corporate world and the financial system. Regulators are concerned more than ever with maintaining the stability of the financial system. Thus, managers need to be up to date with the current tools of risk management, understand how regulators think, and be aware of what their peers are doing. Toward this end, the course has three goals:
1. Equip students with risk management tools
2. Explain how these tools are used in practice
3. Learn principles of risk management and link these principles to corporate risk management.
By the end of the term, the student is expected to:
i. Learn the building blocks of risk management – options and futures
ii. Learn to measure interest-rate risk and credit risk
iii. Learn to hedge interest-rate risk and credit risk
iv. Be able to aggregate different components of risk into a single measure