Financial Risk Management

Financial Risk Management

This course commences by examining the nature and scope of financial risk management as it applies to participants in financial markets. Given no arbitrage opportunities or risk neutral pricing as appropriate, the simplest forms of derivatives (forwards and futures) are then introduced in terms of the mechanics and strategies of these markets together with the theoretical pricing of forward/futures contracts. Given that a swap is nothing more than a convenient way of bundling forward contracts, an introductory exploration of the issues relating to interest rate and currency swaps is then undertaken although the detailed pricing of these instruments is left for a more advanced course. The varied world of options is then explored with particular emphasis on the mechanics of options markets and the properties and strategies of option contracts/positions. Both the binomial and Black-Scholes option pricing models are treated in detail together with variations in the application of these models to assets other than equities (stocks). The Greek Letters and Value at Risk are of considerable importance to derivative market makers and/or financial institutions and these concepts are then treated at the introductory level. The course concludes with a general treatment of risk management strategies and performance evaluation.

The objectives of the course:
- Define risk �generally, and in a project management setting
- Relate risk management to projects and project management
- Suggest ways in which financial risk management is relevant to project management
- Explain the relevant risk exposure that pertains to specific project settings
- Understand how project risk might be affected by ‘Market Dynamics� - Illustrate the value of liquidity in project management and its associated risk
- Indicate how operating risk might be a financial liability
- Associate fraud risk with project management
- Link settlement risk with ‘survival imperative�
- Understand the relationship between project management strategy and risk management
- Indicate how currency derivatives market might hold the key to ‘project sustainability�

The course includes:
- Defining risk �generally, and in a project management setting
- Relating risk management to projects and project management
- Financial risk management and project management
- Risk exposure in a project setting
- Project risk and ‘Market Dynamics� - Liquidity in project management
- Operating risk and financial liability
- Fraud risk and project management
- Link settlement risk with ‘survival imperative�
- Project management strategy and risk management
- Currency derivatives market and ‘project sustainability�

We live in a volatile financial world. Recent events show that the previously unthinkable could and does happen. To thrive in this environment, organisations need to understand the risks that exist, their interrelationships and how they should be managed.
Kaplan Professional’s Financial Risk Management course provides a valuable insight into the key sources of financial risk, their measurement and the practical strategies used to mitigate them.

What topics will be covered?
�Introduction to financial risk management
�Market risk
�Credit risk
�Operational risk
�Legal/regulatory and reputation risk
�Basel II and risk management

This course deals with the ways in which risks are quantified and managed by financial institutions. Among the topics covered are market risk, credit risk, operational risk, the regulation of banks, and the credit derivatives market. The course also focuses on the ways banks and other financial institutions measure market risk and control credit and operational risk. Additional topics include the new Basel II regulatory requirements for banks, the VaR Measure for measuring market risk, hedging techniques used by traders, mathematics of interest rates, economic capital, risk adjusted return on capital (RAROC), and a review of the big losses that have occurred in the financial markets and how they can be avoided. Students are presented with current up-to-date information related to financial risk management with practical, real-world applications.

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