FIN 4000 - RISK MANAGEMENT

credits: 3.0
Risk Management will give students a close look at how the misuse or misunderstanding of risk has brought about financial crises from the Barings Bank debacle of the 1990s to the Great Recession of 2007-2008. Students will obtain an understanding of operational, financial and model risk, and will learn such methods as Value at Risk (VaR) and stress testing. Issues such as moral hazard and adverse selection will be discussed. Will give students tools used to measure or estimate risk, as well as an understanding of the effects of ignoring or underestimating risk. Objectives: A) Articulate the concepts of moral hazard, adverse selection and the winners curse; B) Articulate the different forms of operational risk such as the risk of fraud, the risk of disaster, legal risk, accounting risk and enterprise risk; C) Articulate the characteristics common to financial crises; D) Articulate the financial, economic and policy issues that contributed to the Great Recession of 2007-2008; E) Articulate the concepts and metrics used to manage financial risk; F) Calculate VaR metrics. Method of Instruction: Lecture, classroom lab work, and homework assignments. Method of Evaluation: Homework Assignments 25%, Quizzes 15%, and two exams 60%.

Prerequisite(s): FIN 3010 - FINANCIAL MANAGEMENT