Accounting and Finance

Financial Risk Management

Module code: N1569
Level 6
15 credits in autumn semester
Teaching method: Workshop, Lecture
Assessment modes: Computer based exam, Coursework

Financial risk management is the art of:

• estimating risks
• deciding which are acceptable and which should be mitigated
• determining the level and mode of any risk-mitigation strategies. Some price risks may be (almost) completely eliminated by hedging with futures contracts.

The content of this module is driven by industry demands. We equip you with the detailed knowledge and skills that you will need for entry-level jobs in market risk management. You will be well-versed for questions during job interviews. You will develop your ability to perform advanced operations and to analyse historical data on equities and interest rates, using Excel. These transferable data-analysis skills are invaluable in the current economic environment.

Module learning outcomes

• Identify and compare different sources of financial risks, and understand how to distinguish between systematic (non-diversifiable) and idiosyncratic (diversifiable) risks
• Recognize the major characteristics of derivative instruments and understand how to balance an options book so that it is delta-gamma-vega neutral.
• Implement models for measuring the market risk of portfolios of equities, interest-rate-sensitive products, commodities, futures and options.
• Critically assess the application of regulatory and economic capital to financial risk management policies and test the performance of models used for assessing this capital.