Units of Assessment

Weighting Towards Module Mark (%)

 

30 minute midterm test (question and numerical problem solving, closed book)

30%

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

70%

Qualifying Condition(s) 

 ·        Good numerical skills (good grasp of GCSE level mathematics)

 ·        Basic knowledge of any spreadsheet package e.g. MS Excel

 ·        Enthusiasm towards finance and investment

 A weighted aggregated mark of 40% is required to pass the module.

Financial risk management focuses on the types of risk that arise for a business including; market risk, credit risk and interest risk. This module considers financial risk management strategies; how risk is evaluated; the methods that are available to hedge against risk and the strategies that are employed to mitigate risk.  This is complemented by consideration of operational risk and key risk management issues for financial institutions including regulatory issues such as Basel II.

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

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

 ·              Select the appropriate risk management or hedging instrument to mitigate this risk.

 ·              Understand the market conventions which apply to those instruments.

 ·              Be aware of the cost and 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)

·              Introduction to Risk Management

 ·              Market Risk

 ·              Credit Risk

 ·              Interest Rate Risk

 ·              Principles of Asset Liability Matching

 ·              Derivatives  Markets and Hedging Strategies

 ·              Risk & Regulation: Operational Risk, Basel II

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 two-hour lecture our incorporating class-room participation for better understanding.

 ·              Weekly one hour seminar for solving problems to understand key concepts covered in lectures. Seminars include worked examples which are an integral part of the module. Due to the quantitative nature of the module it is important that participants regularly solve set problems and consult available solution sets. Tutors will provide the necessary support during these sessions for deeper understanding of key issues.

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

 ·              Utilizing ULearn as the main pool of resources including lecture handouts, seminar problems, mock exercises, and discussions. Using ULearn as the main means of communication establishes resource efficiency, communicational effectiveness and visibility for all students.

 ·           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 class 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 where appropriate, how to calculate the numerical solution.

Essential Reading

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

 Recommended Reading

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

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

 Chance D.M., & Brooks R.,  (2010).  An Introduction to Derivatives and Risk Management. 8^th 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  
   

Web Based Resources:

 Additional resources can be found at sites such as:

 Risk Management Association www.rmahq.org

•  Risk www.risk.net