Corporate and Financial Risk Management
The objective of this course is to provide students with an understanding of corporate and financial risk management. For example, the course explores questions such as: why corporations should manage risks, how to measure financial risks, and what tools firms may use to do so, mainly derivative securities. The focus of the course is not on derivatives per se, but a basic understanding and intuition of derivatives markets, its instruments and participants is essential not only to students and specialists in finance, but also to general business practitioners. Therefore, the course will spend a significant time on the terms, valuation, and trading of derivative securities. The course has a theoretical background but will generally focus on applications.
During this course you will learn the principles behind risk management and how derivative instruments can be used to change the risk profile of a corporation or simply a financial position. The course begins by exploring why firms should manage risks. We will then cover the pricing/valuation and trading of derivatives instruments commonly used in risk management (futures/forwards, swaps, and options) as well as the markets in which they trade (exchanges and over-the-counter). The remainder of the course will focus on practical applications of these derivatives for hedging decisions, how to properly measure risk exposure, and the different types of risks firms face (e.g., market, interest, or credit risks). In addition, the course will introduce how firms measure and managing their financial risks through computer simulation tools. We will also discuss how recent crises and changing regulations affect firm risk management practices. The course will contain both theory and examples/cases of risk management applications.
- Why manage risk?
- Forwards and Futures: Pricing and hedging
- Swaps: Pricing and hedging
- Options: Pricing and hedging
- Derivative Markets
- Measuring risks and risk management with derivatives
- Financial Crises and Regulation
- Managing Credit, Counterparty, and Liquidity Risks
This is an excerpt from the complete course description for the course. If you are an active student at BI, you can find the complete course descriptions with information on eg. learning goals, learning process, curriculum and exam at portal.bi.no. We reserve the right to make changes to this description.