Fundamentals of Financial Risk Management
Become familiar with the basic categories of financial risk and their associated terminology, as well as how they interact, change, and escalate. This self-study course defines four financial risk categories – market, credit, liquidity and interconnected financial risks. Each lesson includes lectures, supporting materials, and exercises.
Date:
On-Demand
Course access ends June 30, 2022
Time:
Self-paced
Presented By:
Steve Lindo
Principal, SRL Advisory Services
Session Length:
Lessons are broken into sub-lessons
Sub-lessons vary in length from 30 - 60 minutes
| About This Course |
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History has demonstrated that financial risks are treacherous. The 2008 financial sector crisis, in particular, produced a rich store of examples of companies which either misunderstood or underestimated their financial risks, with dire results. Understanding financial risk is essential for risk managers of all disciplines, because financial, operational, strategic, reputational, and other risks are all intertwined at the enterprise level.
In this fundamentals course, you will become familiar with the basic categories of financial risk and their associated terminology as well as how they interact, change, and escalate. The course is divided into four financial risk categories – market, credit, liquidity, and interconnected financial risks. The lessons explain and give examples of each of these different types of financial risk, together with their measurement and risk mitigation methods. Additionally, you can further explore these types of risks and experience first-hand the practical use of risk measurement and mitigation methods through hands-on exercises. The exercises are designed to replicate real-life financial risk measurement and mitigation situations. Each exercise is described in detail before you attempt to solve it. Afterwards the instructor walks you through the solution and key takeaways.
This is a self-study course. Course access ends June 30, 2022.
Requisite
- Microsoft Word and Excel™
Course Scope
- The principal types of financial risks incurred by organizations across all industries
- Financial risk measurement and mitigation methods
- Practice the application of well-established financial risk management concepts and terminology
- Understand the appropriateness, reliability, and limitations of financial risk measurement tools and methodologies
- Real-life examples
Learning Objectives
- Understand the principal types of financial risk, their measurement and mitigation methods
- Gain familiarity with financial risk management concepts and terminology
- Recognize the occurrence of financial risk in real-life situations
- Evaluate the appropriateness of financial risk measurement and mitigation methods
- Practice the application of well-established financial risk management concepts and terminology
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| Agenda |
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Topic |
Lesson 1
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Fundamentals of Financial Risk Management & Market Risk
Lesson 1.1: Introduction and Market Risk Categories, part 1
Lesson 1.2: Market Risk Categories, part 2
Lesson 1.3: Market Risk Measurement & Mitigation
Market Risk Measurement (3 optional exercises)
- Portfolio VaR Calculation
- Stress Test of Assets, Liabilities, Currencies, and Hedges
- Case Study
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Lesson 2
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Fundamentals of Credit Risk
Lesson 2.1: Principles of Credit Risk Analysis and Rating & Categories
Lesson 2.2: Credit Risk Measurement
Lesson 2.3: Credit Risk Mitigation
Credit Risk Analysis (4 optional exercises)
- Fixed Asset Finance
- Loss Given Default for Interest Rate, Currency Swap, Option Counterparties
- Expected Loss Calculation for Portfolio of Loans, Bonds, Swaps
- Expected Loss of Counterparty Exposure Exceeds Limit
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Lesson 3
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Fundamentals of Liquidity Risk
Lesson 3.1: Liquidity Risk Categories
Lesson 3.2: Liquidity Risk Measurement
Lesson 3.3: Liquidity Risk Mitigation
Funding Liquidity Risk Management (3 optional exercises)
- Funding Mix
- Investment Mix
- Rebalancing a Portfolio within Investor's Liquidity Tolerance
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| Lesson 4 |
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Fundamentals of Interconnected Risk
Lesson 4.1: Interconnected Risk Categories
Lesson 4.2: Interconnected Measurement and Mitigation
Interconnected Risk (2 optional exercises)
- Assess Contagion Risk in an Investment Portfolio
- Assess Wrong Way Risk in a Currency Forward
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| Who Should Attend |
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This is a fundamentals course designed for:
- Non-financial professionals such as IT, legal, compliance, and HR who work closely with financial risk managers
- Non-financial professionals, working or expecting to work in finance or risk management roles
- Risk professionals who want to learn more by using exercises to apply financial risk management concepts and methods
- Financial professionals preparing for or considering working in risk management roles
- Risk professionals working in non-financial risk management roles, such as ERM or operational risk management
- Finance professionals working in accounting, reporting, payments, and treasury roles who have a basic understanding of market, credit, liquidity, and interconnected risk identification, measurement and mitigation, either through study or by working alongside financial risk management professionals.
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| About Our Expert |
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Steve Lindo is a financial risk manager with over 30 years’ experience managing risks in ALM, funding, banking, and trading portfolios. His current role is Lecturer and Course Designer at Columbia University’s School of Professional Studies, teaching Financial Risk Management to graduate students in Columbia’s MS in Enterprise Risk Management program. He is also Principal of SRL Advisory Services, an independent consulting firm specializing in risk governance, education and strategy, financial technology innovation, risk data management, regulatory expertise, information risk management, and financial litigation support.
Steve's previous positions include Director of Treasury Management and Mortgage Risk at Fifth Third Bancorp and Vice President of Risk Capital Management at GMAC Financial Services LLC (now Ally Financial). In 2010, Steve completed a two-year engagement as Executive Director of PRMIA. Before that, he held a number of risk management roles in Cargill’s proprietary financial trading group, which was subsequently de-consolidated into two separate hedge funds, Black River Investments and Carval Investors. He spent his early career as an international banking and credit officer with Lloyds Bank and First National Bank of Chicago (now part of JPMorgan Chase) in the UK, Spain and Brazil.
Steve is a regular presenter at conferences, webinar host, and author of risk management articles and case studies. He has a BA and MA from Oxford University and speaks fluent French, German, Spanish and Portuguese.
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| Continued Risk Learning Credits: 9 |
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 |
| Members |
$449 |
| Non Member |
$499 |
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