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RIM-EMBA-18
MBA(Exe.) 2018-19: Term-III

2
Course Name-Risk Management
Credits 1.50
Faculty Name Amulyadhan Rout
Program Risk Management
Academic Year and Term 2018-19

1. Course Description

The Risk Management process is becoming an increasingly important tool in the management of business and personal financial health. An effective and efficient corporate risk management program leads to knowledge and control of costs and an improved bottom line. This course focuses on the ways in which businesses and society assess, control, and transfer risk.

The goal of this course is to engage students in active discovery of risk management principles.

The building blocks for Risk Management are broadly divided into, Risk Identification, Risk Measurement, Risk Pricing, Risk Monitoring and control & Risk Mitigation.

2. Student Learning Outcomes:

§ The course will train students to be able to involve in identification of risks and associated potential costs, analysis of the causes of risk of financial loss, determination of various strategies to treat risk, selection of strategies appropriate to the goals and objectives of the business, implementation of the selected strategies, management and monitoring of results
§ Students should be able to understand the way by which business and society make an assessment of different risk so that it can be controlled or can be transferred.
§ Students will be prepared to function in a business environment, developing an awareness of the challenges, the tools, and the process of designing and implementing a risk management program.
§ After the course students will be able to understand the effective risk management program that will reduce losses, and improve financial performance and employee morale.
§ This risk management program aims at making adjustments, adapting to external and internal forces, and crisis or disaster management are incorporated in the corporate risk management process.

Popular career options after completing the Risk Management study could be taking up a manager position in the public and private sector have ongoing needs for people trained in finance. Employment opportunities for financial risk managers are available with:
§ Banks (Commercial, Investment, Payment & Small Finance), Financial Institutions, NBFI, Treasury, &, Equity Research
§ Asset Management and Asset Reconstruction Companies
§ Insurance companies
§ Regulatory agencies 3. Required Text Books and Reading Material

The class room teaching, discussions and course materials would be exhaustive and self-sufficient. I would prefer students to clear their doubts by raising questions at the end of each class or at the beginning of next class and participate in the class. However, following reference books, journals, articles and RBI Circulars can be looked in to have a better understanding of Risk Management.

Ø Risk Management & Financial Institutions by John C Hull: Wiley & Sons Publication (Text Book)
Ø P Suresh & Justin Paul :Management of Banking & Financial Services: Pearson Publication 2015
Ø An Introduction to Derivatives & Risk Management: by Don. M Chance & Robert Brooks
Ø Crouhy, M. Galai, D., Mark, R (2005) “The essentials of risk management”. McGraw-Hill
Ø Indian Institute of Banking & Finance: Theory and Practice of Treasury & Risk Management
Ø Bank for International Settlements (2003). Sound Practices for the Management and Supervision of Operational Risk, Risk Management Group of the Basel Committee on Banking Supervision (February).
Ø Banerjee, S. Banipal, K (2005). “Managing Operational Risk: Framework for Financial Institutions” Working paper, A.B Freeman School of Business, Tulane University (November).
Ø Bessis, J (2002). “Risk management in banking“, John Wiley & Sons Ltd
Ø Discussion Papers on Implementation of the Basel II Capital Framework: Australian Prudential Regulation Authority (APRA), http://www.apra.gov.au/ADI/Basel-II-implementation-in-Australia.cfm
Ø Collection of Reading Materials : Sources – Bank of International Settlement (BIS) & Reserve Bank of India(RBI)
4. Tentative Session Plan

Session NumberTopics/Activities
1a. Introduction to Risk Management
b. Types of risk : Market, Credit, Liquidity, Operational, Interest, Foreign Exchange, Financial Derivatives, Commodities, Exposure, Investment, Country Risk, Legal, Environmental & Political
2Designing Model for Credit Risk Index for Banks (CRIB) using CAMELS
3 & 4Trading in different Markets with special reference to Financial & Commodity Markets
§ Functions of Treasury (Front Office, Mid Office & Back Office)
§ Derivative Products: Option & Option Pricing,
Forwards, Futures & Swaps
5a. Capital Adequacy
b. Basel I , II & III
c. Latest developments/changes in Regulatory framework viz. Revised Standards for Market Risk, Counterparty Credit Risk may be discussed (BASEL Circular)
6a. Capital Structure and Computation of Capital to Risk Weighted Asset Ratio (CRAR) with Test Cases
b. Importance of Credit Rating (Internal & External)
7 & 8Credit Risk and its different approaches
Ø Risk Management in Credit Delivery and Asset Management
Ø Treatment of Credit Risk in India
Ø Securitization & Credit Derivatives
Ø Credit Migration
Ø Credit Risk Measurement after the Financial Crisis
Ø Data Analysis & Business Simulation
9Market Risk Management
This section tests a candidate’s knowledge of market risk measurement and management techniques. These include:

· Fixed-income interest rate sensitivities
· Volatility exposures
· Value-at-Risk (VaR) and back testing VaR
· Expected shortfall (ES)
· Correlations and copulas
· Parametric and non-parametric estimation methods
· Extreme value theory (EVT)
· Exotic options and mortgage-backed securities

10Foreign Exchange Risk
    § Introduction to Foreign Exchange Risk
    § What is Foreign Exchange Risk?
    § Hedging of Foreign Exchange Risk.
    § Managing Foreign Exchange Risk
    § Common Techniques and Instruments
    § External Commercial Borrowing (ECB)
    § External Credit Agency (ECA) and ECA backed credit
    Other aspects that can be covered:
    a. Case study on Risk Analysis
    b. Risk on Equity & Debt Syndication
    c. Risk on Bilateral and Corporate Debt Restructuring (CDR)
    d. Infrastructure Finance Risk
    e. Risk relating to Contingent Liabilities (Letters of Credit, Bank Guarantee and Deferred Payment Guarantee)

    Reading/case list etc.: Books, References, Readings Material, Class Notes (Important) & Power Point Presentation shown in the Class

    5. Evaluation

    6. Academic Integrity

    The faculty expects from its students a high level of responsibility and academic honesty. Because the value of an academic degree depends upon the absolute integrity of the work done by the student for that degree, it is imperative that a student demonstrate a high standard of individual honor in his or her scholastic work.

    Scholastic dishonesty includes, but is not limited to, statements, acts or omissions related to applications for enrollment or the award of a degree, and/or the submission as one’s own work or material that is not one’s own. As a general rule, scholastic dishonesty involves one of the following acts: cheating, plagiarism, collusion and/or falsifying academic records. Students suspected of academic dishonesty are subject to disciplinary proceedings.

    Plagiarism, especially from the web, from portions of papers for other classes, and from any other source is unacceptable and will be dealt with under the university’s policy on plagiarism (see general catalog for details). This course will use the resources of turnitin.com, which searches the web for possible plagiarism and is over 90% effective.

    Created By: Alora Kar on 11/17/2018 at 09:06 AM
    Category: MBA(Exe.)2018-19 T-III Doctype: Document

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