General Information
Promotional Video
Unavailable
Target Audience
Students who expect to work and advance their careers in finance, particularly those who would like to work for a bank, insurance, or other large financial institution. Students who wish to develop economic intuition and understand how banks and large financial institutions operate in a rapidly changing financial landscape.
The course makes useful links between various finance and economic subjects (i.e., investment, corporate finance, derivatives, macroeconomics, econometrics) in the context of financial risk management.
The course will cover the latest financial industry news related to risk management and banking regulation. Weekly news articles will be assigned for in-class discussions. Many students find that these weekly news-article discussions help prepare them for job interviews.
RSM2308 is a supplemental course for the Finance emphasis. This is not a mathematics/statistics course. Although basic statistics and mathematics will be used to help students understand the practice of risk management, this course focuses on developing economic intuitions.
Format
- 9 x 2.45-hour sessions
- This course will be delivered under the dual-delivery model (Hyflex)
- Classes will be live-streamed via Zoom for students who cannot attend in-person lectures
- All students are expected to attend most lectures in person. This is not an online class.
- Synchronous online learning is an option that intends to help increase the flexibility of students who may face the occasional difficulty of attending in-person lectures.
Course Mission
- Understand the importance of banking regulations and how financial institutions manage risks.
- Understand and be able to apply modern elements of financial risk management.
- Understand and be able to read, understand, and make informed opinions on current news related to the banking and financial industry.
- Understand how to quantify market risks, credit risks, and operational risks by different financial institutions.
- Understand potential reasons behind the 2008 credit crisis and how banking regulations have evolved in the post-crisis period.
- Understand macroprudential policy aimed at mitigating systemic risk due to COVID-19
- Understand the recent banking crisis in 2022-2023 that resulted in the downfall of Silicon Valley Bank, Credit Suisse, Signature Bank, and the First Republic.
- Understand how the changing interest-rate environment affects banks’ balance sheet and their ability to manage risk.
- Develop economic intuitions and perspectives on the efficacy and the adverse effects of recent regulatory changes in the financial industry.
Course Scope
This course addresses the way companies, particularly financial institutions, manage risk. It covers credit, market, model, and operational risks. The nature of bank regulation and the Basel I, II, and III capital requirements for banks are examined. Other topics include copulas, Dodd-Frank regulations, macro-prudential policy in response to COVID-19, Crypto market regulations, and the latest banking crisis of 2023.
Evaluation and Grade Breakdown
| Component | Due Date | Weight |
|---|---|---|
| Group Assignment 1 | Week 4 | 15% |
| Group Assignment 2 | Week 9 | 15% |
| Individual In-Class Participation | Ongoing | 15% |
| Final Exam (Online) | Exam Period | 55% |
Required Resources
- “Risk Management and Financial Institutions” by John Hull, fifth edition, Wiley.
- Online subscription to the Wall Street Journal (WSJ.com) – used for weekly in-class discussions
- MS Excel