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2010/1 Module Catalogue
Module Provider: School of Management Short Name: IFSO4
Level: M Module Co-ordinator: MASON A Dr (SoM)
Number of credits: 15 Number of ECTS credits: 7.5
Module Availability
Assessment Pattern

Unit(s) of Assessment 

Weighting Towards Module Mark (%) 

Individual assignment based on seminar work 


Two-hour closed book examination 


Qualifying Condition(s) 


Module Overview
The primary focus will be on the forms of risk against which financial services institutions must hold capital: credit risk, market risk and operational risk.  It examines what these risks are, how they are measured and how they can be mitigated.  Importantly, the module will consider how risk influences the level of capital an institution must hold and how through this it influences performance.  This is vital for both the management of the institution and for a solid understanding of the role of risk and capital, an issue that is covered from the regulatory perspective in the module Regulation of Financial Services Institutions.  The module will also explore some of the key non-financial risks faced by institutions in their operations that need to be monitored and managed.
Module Aims
This module will support students in developing a framework for evaluating the process of managed risk taking in financial services markets.  It is aimed primarily at banking and capital markets.  Students will gain an understanding of the way operational decision-making links to the risks that need to be measured and managed.  The module will enable students to evaluate the work of regulators in ensuring that all types of financial services institutions manage risk appropriately and to understand why these institutions are expected to put risk-based models at the centre of decision-making.
Learning Outcomes

On successful completion of this module, the student will be able to:  

  • Describe and critically analyse the inherent challenges and risks facing banking institutions   
  • Evaluate the pricing, profitability and credit risks taken during the lending cycle   
  • Evaluate the nature of market and operational risk   
  • Evaluate the role of risk in determining both the price of lending products and the outcome of investment products   
  • Identify and discuss the operational and non-financial risks faced by financial services groups   
  • Understand and describe the challenge facing banking groups in the management of assets and liabilities   
  • Identify, interpret and critically evaluate a range of published industry and academic resources, research and papers relating to risk management in financial institutions   
  • Produce logical arguments in a range of appropriate formats that clearly and concisely explain, analyse and evaluate key issues, strategies and tactics in managing risk in financial services institutions making use of both academic and industry research and relevant examples 
Module Content

Credit Risk Framework   

  • Credit risk   
  • Management of credit risk in wholesale markets  

Market Risk, Interest Risk and Hedging Strategies   

  • Market risk 1 – Key Market Risks   
  • Market risk 2 – Measurement and simulation (including Value at Risk and Stress Testing)   
  • Interest rate risk   
  • Traders’ management of risk and hedging strategies  

Operational and Non-financial Risk   

  • Operational risk, ERM, Reputation Risk 

Asset-Liability Management   

  • Principles of Asset-Liability Management  
Methods of Teaching/Learning

The teaching and learning strategy is designed to support students’ understanding of key concepts and the development of their intellectual, practical and transferable skills as stated in the module aims and learning outcomes. 

Teaching and learning will be from ifs’ City campus and will be through a combination of intensive face-to-face block teaching in the form of lectures and seminars (including contributions from senior industry practitioners); and learning centred on the virtual learning environment, supported by students’ independent study. 

Each block of learning at the ifs campus will consist of   

  • Two hours of lectures including discussion time per week   
  • One hour of seminar/industry workshops (the latter taking place when
  • industry guests are invited)   
  • Two hours of weekly office hours 

Students will be provided with a core text and course handbook.  Where relevant, the module will make use of industry-derived case studies.
E-Learning support via U-Learn and myifslearning will include:   

  • Learning materials   
  • E-book and e-Journal access   
  • Discussion forums   
  • Lecturer/tutor support 

Students will also be encouraged to identify and share relevant readings and other links with the course group to support their own knowledge creation.   

In addition, this module will make use of a bank simulation model to support students in understanding the workings of asset-liability and liquidity management models as used by banks.
Selected Texts/Journals

Required text   

Hull , John C. (2006), Risk Management and Financial Institutions, Pearson Education 


Bessis, J. Risk Management in Banking, (2nd Edition, John Wiley & Sons, 2002)   

Van Gestel, T., and Baesens, B., , Credit Risk Management: Basic Concepts: Financial Risk Components, Rating Analysis, Models, Economic and Regulatory Capital (OUP Oxford , 2008)  

Computer resource   

Banking simulation model  

Other indicative reading  

There are a number of journals that contain relevant material.  Students need to ensure they are keeping up-to-date on issues relating to financial services and, in the context of this model, risk management.  This short selection provides a starting point:  

  • Journal of Bank Regulation 
  • Risk 
  • The Banker 
  • Financial World (students will receive this automatically as members of ifs
  • Journal of Banking and Finance 
  • Journal of Financial Services Research 
  • Journal of Financial Intermediation 
  • Journal of Economics & Business 
  • ABA Banking Journal 
  • Banking Strategies 
  • Journal of Retail Banking
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