Corporate Financial Risk Management
NEW COURSE! When talking about risk management, we mostly talk about the risk within financial institutions: banks, asset managers, insurers, etc. However, non-financial companies, which form a much bigger part of the economy, are also exposed to financial risks and devote significant resources to risk management. In this course, we will reveal and discuss the basics of Corporate Financial Risk Management.
| About This Course |
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When talking about risk management we mostly talk about the risk within financial institutions: banks, asset managers, insurers, etc. However, non-financial companies, which form a much bigger part of the economy, are also exposed to financial risks and devote significant resources to risk management. In this course, we will reveal and discuss the basics of Corporate Financial Risk Management.
Over the eight lessons, we will discuss the following:
- What is corporate financial risk management (CFRM) and how is it different from the management of risk for financial institutions
- Why in theory CFRM does not add value: Modigliani-Miller irrelevance theorems (1958) and why in practice CFRM adds value: real world
- How companies manage the following risks: funding, currency, interest rate, counterparty, commodity
Gain Practical Experience with Case Studies
Using three case studies throughout the course, participants will be required to analyze market risks and create simple risk management policies.
After attending this course, you will be able to:
- Describe how corporate RM is different from RM for financial institutions
- Remember the main areas of CFRM and main CFRM products
- Analyze the funding, currency, interest rate, commodity and counterparty risks in a variety of frameworks
- Create a simple risk management policy for a number of companies
Prerequisites include basic concepts of:
- Corporate finance: concepts of EBITDA, Net Debt, book vs. market value of equity
- Statistics and mathematical finance: normal and log-normal distribution, variance-covariance method, Monte Carlo simulation, Value-at-Risk, efficient frontier
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| Agenda |
| Week |
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Topic |
Week 1
April 20
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Lesson 1.1: Introduction
• What is CFRM
• Theory and practice of CFRM
Lesson 1.2: Market Risk Quantification
• Earnings at Risk
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Week 2
April 27
Case Study 1
to be completed |
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Lesson 2.1: Funding Risk
• Different measures of funding risk
• Examples of funding risk mismanagement
• Trade-off theory
• Optimal debt maturity
Lesson 2.2: Drivers of Funding Cost
• Fundamentals
• Market risk premium
• Technicals (CDS liquidity)
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Week 3
May 4
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Lesson 3.1: Currency Risk Management
• Examples of currency risk mismanagement
• Dynamics of G10 vs. Emerging Markets currencies
• Three types of currency risk
• Transaction risk management
Lesson 3.2: Translation Risk Management
• Matching assets and liabilities
• Variance-covariance method
• Book value at risk
• Efficient Frontier
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Week 4
May 11
Case Study 2
to be completed |
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Lesson 4: Commodity Risk
• What is specific about commodity risk
• Hedging oil revenues
• Hedging oil costs
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Week 5
May 18 |
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Lesson 5.1: Interest Rate Basics
• Pricing bonds and swaps
• Relationship between discount factors and forward rates
Lesson 5.2: Yield Curves
• Components of the funding cost
• Interest rate swaps
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Week 6
May 25
Case Study 3
to be completed |
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Lesson 6.1: Interest Rate Risk Management
• Asset and liability management
• Risk versus return
Lesson 6.2: Fixed Floating Mix & Duration
• Drivers of fixed-floating policies
• Historical swap premium
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Week 7
June 1
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Lesson 7.1: Counterparty (Credit) Risk
• Reduced form models
• Correlated defaults
Lesson 7.2: Credit Risk Modelling
• Optimum deposit composition
• Counterparty risk and credit charges
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Week 8
June 8
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Lesson 8: Risk Management Process in Practice
• Risk management policy
• Organization
• Mitigation of derivative risks
• Benchmarking |
| Who Should Attend |
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- All risk management professionals and practitioners including financial services, corporate and investment banking, sales and trading, structuring, credit, risk managers, investment managers, consultants
- Students and professors in the risk management field, at the level of MBA or MSc in Finance
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| About Our Expert |
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Dr. Stanley Myint is the Head of Risk Management Advisory at BNP Paribas and an Associate Fellow at Saïd Business School, University of Oxford. At BNP Paribas, he advises large multinational corporations on issues related to risk management and capital structure. His expertise is in quantitative and corporate finance, focusing on fixed income derivatives and optimal capital structure. Stanley has 26 years of experience in this field, including 15 years at BNP Paribas and previously at McKinsey & Company, Royal Bank of Scotland and Canadian Imperial Bank of Commerce.
Stanley has a PhD in physics from Boston University, a BSc in physics from Belgrade University. He speaks French, Spanish, Serbo- Croatian and Italian. At the Saïd Business School, Stanley teaches two courses with Dimitrios Tsomocos and Manos Venardos: “Financial Crises and Risk Management” and “Fixed Income and Derivatives.”
Together with Fabrice Famery, Stanley is an author of the Handbook of Corporate Financial Risk Management, second edition, published by Risk books.
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| Continued Risk Learning Credits: 6 |
PRMIA Continued Risk Learning (CRL) programs provide you with the opportunity to formally recognize your professional development, documenting your evolution as a risk professional. Employers can see that you are not static, making you a highly valued, dynamic, and desirable employee. The CRL program is open to all Contributing, Sustaining, and Risk Leader members, providing a convenient and easily accessible way to submit, manage, track and document your activities online through the PRMIA CRL Center. To request CRL credits, please email [email protected].
| Registration |
| Membership Type |
Price |
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| Sustaining, Corporate, Contributing, and RIM Members |
$499.00 |
| Non Member |
$599.00 |
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