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2010/1 Module Catalogue
 Module Code: MAN3046 Module Title: FINANCIAL RISK MANAGEMENT
Module Provider: School of Management Short Name: MAN3046
Level: HE3 Module Co-ordinator: MASON A Dr (SoM)
Number of credits: 20 Number of ECTS credits: 10
Module Availability

Semester 2





Assessment Pattern

Unit(s) of Assessment 

Weighting towards Module Mark (%) 

One hour midterm test (multiple choice question and numerical problem solving, closed book) 


Two hours final examination (short questions and numerical problem solving, closed book) 


Qualifying Condition(s) 


·              Good numerical skills (good grasp of GCSE level mathematics) 
·              Basic knowledge of any spreadsheet package e.g. MS Excel 
·              An enthusiasm towards finance and investment 

Module Overview

Financial risk management focuses on the types of financial risk that businesses face including; market risk, credit risk and interest risk. The module studies risk management instruments including futures, options and swaps; who uses these instruments and why they use them.  This module considers risk managements strategies in the context of markets, methodology and valuation of risk management instruments.  This is complemented by consideration of operational risk and key regulatory issues such as Basel II.


Business Finance (HE2) & Financial Management (HE3) 

Module Aims

The aim of the module is to introduce the notion of risk, primarily financial and investment risk, and the instruments that exist to hedge different risks.  The module provides students with an insight into the reasons financial risk management is undertaken and the range of instruments and strategies that can be employed to reduce risk.

Learning Outcomes

On completion of the module the student will be able to:



·              Identify potential financial risks in terms of interest rate risk, credit risk and market risk.



·              Select the appropriate risk management or hedging instrument.



·              Understand the market conventions which apply to those instruments.



·              Understand the cost of using selected risk management instruments.



·              Be aware of the risk of using financial instruments.



·              Understand key regulatory issues such as Basel II and their role in risk management.



Understand the principles of Asset Liability Management (ALM) 

Module Content

·              Introduction to Risk Management



·              Market Risk – including measurement and simulation



·              Credit Risk – including wholesale markets



·              Interest Rate Risk



·              Derivatives  Markets and Hedging Strategies: Futures and Forward Rates, Options and Swaps



·              Risk & Regulation: Operational Risk, Basel II



·              Principles of Asset Liability Matching




Methods of Teaching/Learning

The teaching and learning strategy is designed to allow a student to come to grips with what is essentially a subject of mixed theory and practice.



·              Weekly one two-hour lecture incorporating class-room participation for better understanding.



·              Weekly tutorial/seminar sessions for to illustrate the contents covered in lectures. The tutorials include worked examples which are an integral part of the module. Due to the quantitative nature of the module it is of paramount importance that participants regularly solve set problems and consult available appropriate solution set. Tutors will provide the necessary support during these sessions for deeper understanding using  short and long problem solutions.



·              ULearn discussion forums to address any issues related to the content, learning and teaching environment, and delivery of the module and/or specific topics.



·              ULearn will be used for delivering formative feedback.



·              Utilizing ULearn as the main pool of resources including lecture handouts, tutorial problems, mock exercise, and discussions. Besides using ULearn as the main means of communication to establish resource efficiency and communicational effectiveness.



·              Weekly office hours provided by lecturers.



·              Support of lecture material by directed reading in selected textbooks and journal articles.





Assessment Strategy:





·              The assesment is undertaken in two parts a closed book test and closed book examination. Both components can be reassesed if the student fails to reach the required standard. 



The assesments are designed to test the understanding and problem solving abilities of the students in terms of both theoretical and practical application. Because of the quantitative nature of the subject tests are designed to establish whether the student knows which solutions are appropriate to particular situations and when appropriate how to calculate the numerical solution.

Selected Texts/Journals

Essential Reading



Hull J.C. (2010) Risk Management and Financial Institutions. 2nd ed. Pearson.



Recommended Reading



Bessis J. (2010) Risk Management in Banking. 3rd ed. Wiley





Hull J.C. (2011) Fundamentals of Futures and Options Markets.  7th ed.  FT Prentice Hall.





Chance D.M. & Brooks R. (2010) An Introduction to Derivatives and Risk Management. 8th ed. South Western



Background Reading



Appropriate journal articles:



  • Journal of Finance 


  • Journal of Financial Economics


  • The Review of Financial Studies


  • Journal of Derivatives


  • Journal of Investments


  • Journal of Fixed Income





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