Overview
The course is designed to introduce the students to analyze risks facing modern financial institutions and introduce tools that financial institutions use to manage various risks in a rapid changing financial environment.
The course focuses on managing return and risk in modern financial institutions. The central theme is that the risks faced by financial institutions managers and the methods and markets through which these risks are managed are becoming increasingly similar whether an institution is chartered as a commercial bank, a savings bank, an investment bank, or an insurance company. Although the traditional nature of each sector’s product activity is analyzed, a greater emphasis is placed on new areas of activities such as asset securitization, off-balance-sheet banking, and international banking.
On completion of this course, the students should be able to:
l Understand different sources of risks facing modern financial institutions; including interest rate risk, liquidity risk, credit risk and market risk, etc.;
l Comprehend various risk models used to measure and analyze different risks;
l Grasp different tools that financial institutions use to manage risks.
Syllabus
l Financial services industry
l Interest rate risk
l Credit risk
l Liquidity risk
l Market risk
l Sovereign risk
l off-balance-sheet activities
l Operational risk
l foreign exchange risk
l Liability and liquidity management;
l Deposit insurance and other liability guarantees
l Capital adequacy
l Product diversification; Geographic diversification
l Futures and forwards
l Options, caps, floors, and collars
l Swaps; loan sales and other credit risk management techniques
l Securitization