Risk Management for Financial Institutions Course Outline Winter 2020 Rick Nason PhD CFA Associate Professor of Finance Dalhousie University This is a comprehensive course in Risk Management that introduces the basics of both Enterprise Risk Management as well as Financial Risk Management A critical analysis of the rise and evolution including the future evolution of risk management is utilized The specific concepts frameworks techniques and regulatory aspects of risk management are discussed in both the context of a general organization and in the specific case of financial institutions The focus of the course is on critical thinking about risk and implementing risk management The theory of risk management which is still largely undeveloped thus takes a backseat role and will only be the focus when relevant Overview Risk Management for Financial Institutions is a course designed to illustrate best practices and techniques of risk management and risk management implementation in the context of organizations both profit and not for profit with an emphasis on the more specific context of risk management of financial institutions Risk management has gained strategic and competitive importance in recent years and has gained a newfound level of respect and prominence as a separate professional field within the broader context of management Nowhere has the newfound importance of risk management as a discipline been more apparent and more important than in financial institutions With the rise of risk management techniques stemming from derivatives and the broadening of capital markets instruments such as securitizations along with the rapidly changing role of financial institutions in the world economy the demand and need for highly trained risk professionals has never been greater Adding to the demand for and challenges of the risk manager are new risks that are coming to the fore Risks such as cyber risk social media reputational risk and demographic changes are tasking the talents of the risk manager in new ways To compound the issue a new layer of regulatory compliance and governance concerns is the environment in which risk management is now practiced The political landscape will likely prove to make this an interesting period of time for ERM and particularly so in the realm of financial institutions The historical emphasis on regulation as a means to risk management is likely to come under question and thus taking a critical approach to studying risk management may be timely This course focuses on Enterprise Risk Management while also covering the basics of the more specialized Financial Risk Management Enterprise Risk Management ERM is a holistic way of 1 examining the risks of an organization ERM goes beyond the more traditional siloed approach to risk management and thus attempts to be a more efficient and a more effective philosophy of risk management ERM has been associated with better governance better credit ratings increased risk adjusted returns for investors and a better overall competitive environment for the stakeholders of a firm Despite its perceived advantages effective ERM implementation has proven to be difficult to achieve in practice As a holistic risk management technique ERM also requires managers to think and act holistically using a variety of techniques and management philosophies This course will not shy away from the difficulties of ERM implementation and will force students to critically examine and think about the various approaches to risk management and how to appreciate the need to examine and respond to the specific contexts and needs for risk management that each organization has The course is designed to be as interactive as possible and employs a variety of pedagogical techniques Risk management is not a passive or a theoretical exercise Risk management is not static it is dynamic Implementing risk management often produces more questions and problems than it does answers or solutions Effective risk management requires engaged management and this course will attempt to put that into practice The course has twelve modules As risk management is a rapidly evolving field each of the modules is designed with maximum flexibility so that the course can be kept as current as possible The course will cover the classic approaches to risk management but also will not shy away from utilizing readings and exercises on techniques that are evolving or controversial In order to allow the course to be as flexible and current as possible there will not be a standard set of Lecture Notes as is traditional CEGE MBA FS courses Instead each of the modules will consist of a set of lectures and readings that are designed to be as flexible and current as possible while still acknowledging the classic literature and principles of risk management Each module will consist of a combination of one or more of the following A video lecture of the topics being covered in the module A set of readings and multimedia material to be reviewed by the student for the module Video lectures to cover technical aspects of risk modeling or risk analysis Additionally every three modules will have a Live Classroom that will occur approximately two weeks before each assignment is due Marking Assignments 4 Participation both for distance and intensive portions Examination Term Project 25 25 25 25 2 Textbook There are a series of three short books that provide the backbone for this course Nason R Rethinking Risk Management Critically Examining Old Ideas and New Concepts 2017 Business Expert Press N Nason R and L Fleming Essentials of Enterprise Risk Management Practical Concepts of ERM for General Managers 2018 Business Expert Press NF Nason R and B Chard Essentials of Financial Risk Management Practical Concepts for the General Manager 2018 Business Expert Press NC The lectures and modules will follow these books in a very loose manner The books supplement the material in the course rather than forming the backbone of the course Participation Participation is a key component of the grade for this course Students are expected to contribute to the online discussions the Live Classrooms and especially during the Intensive Participation will be assessed based on overall quality of the contribution to the learning of the class Additionally all students will be required to peer rank everyone in the class from best to worst contributor at the conclusion of the course Term Project Another key