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• Course Overview
• Learning Objectives
• Course Requirements
• Policies & Expectations
• Course Schedule
History has demonstrated that financial risks are treacherous. The 2008 financial sector crisis, in particular, produced a rich store of examples of companies which underestimated their financial
risks, with dire results. In this course you will become familiar not only with the basic categories of financial risk, but also how they interact, change and escalate. While financial risk
management begins with understanding complex finance concepts and theory, learning how to effectively manage financial risks in business situations requires practice in their application, through
real-life examples, exercises and case studies. In order for you to thoroughly acquire the technical knowledge and business judgment contained in this course, live inter-action between you, the
instructor and other students will be promoted as much as possible.
Structurally, the course is divided into four financial risk categories – market, credit, liquidity and interconnected financial risks. The sessions will explain and give examples of each of these
different types of financial risk encountered in business situations, together with their measurement and risk mitigation methods. Becoming familiar with the extensive terminology used in the
universe of financial assets, liabilities and their risk profiles, is also an essential component of the course. You will achieve this by reading the assigned reading materials and interacting with
the instructor and your fellow students.
Financial risk concepts and the risks inherent in financial assets and liabilities require practice in order to be fully understood. The course achieves this by illustrating them with frequent,
real-world examples. Your ability to recognize financial risks, apply suitable analytical and measurement approaches and take effective risk mitigation steps will be tested through individual
exercises. Your ability to evaluate and manage financial risks when available facts are incomplete or ambiguous, when time is of the essence and other stakeholders have to be convinced of the best
course of action, will be tested through case studies based on actual historical situations, performed both individually and in teams. The course is designed to prepare you for the spectrum of
financial risks which you will encounter and have to manage in real-life situations. As it progresses, you will come to recognize that lifelong learning, curiosity, continuous research and healthy
skepticism are essential ingredients for effective financial risk management.
This course also includes the ethics of providing integrity in risk identification, ensuring capture of all key issues, and appropriate risk disclosures, both internally and externally.
Details of the class contents, readings and assignments are provided in the accompanying Course Schedule.
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By the end of the course, you will be able to:
• Converse confidently in the terminology of financial instruments and their associated risks
• Discuss complex financial risk concepts and their applicability to real-life financial assets and liabilities
• Recognize and challenge the rationale behind financial risk/return propositions
• Identify both explicit and implicit financial risks in corporate activities
• Assess the magnitude and likelihood of occurrence of financial risks in real-life situations
• Evaluate the appropriateness, reliability and limitations of financial risk measurement tools and methodologies
• Exercise sound and defensible judgment concerning financial risks which are unusual, complex and/or uncertain
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Alexander, Carol. Market Risk Analysis, Volume III. John Wiley & Sons, 2008.
ISBN: 978-0-470-99789-5 http://clio.columbia.edu/catalog/7747356
Hull, John. Risk Management and Financial Institutions. 3rd ed. John Wiley & Sons, 2015.
ISBN: 978-1-118-26903-9 https://clio.columbia.edu/catalog/12046155
Joseph, Ciby. Advanced Credit Risk Analysis and Management. John Wiley & Sons, 2013.
ISBN: 978-1-118-60491-5 https://clio.columbia.edu/catalog/10715915
Matz, Leonard. Liquidity Risk Management. Thomson/Sheshunoff, 2002.
ISBN: 978-1-558-27302-3 http://clio.columbia.edu/catalog/10915763
Szylar, Christian. Handbook of Market Risk. John Wiley & Sons, 2014.
ISBN: 978-1-118-12718-6 http://clio.columbia.edu/catalog/10915048
Columbia University Library
Columbia’s extensive library system ranks in the top five academic libraries in the nation, with many of its services and resources available online: http://library.columbia.edu.
SCE Academic Resources
The Office of Student Life and Alumni Relations (SLAR) provides students with academic counseling and support services such as online tutoring and career coaching: http://ce.columbia.edu/student-
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Course Requirements (Assignments)
Your course participation will be evaluated in both live sessions and the discussion forums. Points will be given for frequency and thoughtfulness of contribution and initiative demonstrated in
small group exercises.
Case studies based on true life company situations will be assigned at the beginning class for each of the four financial risk categories. You will complete three of these individually. The final
case—which is related to the fourth, integrated form of financial risk—will be completed as a team. Your work in these cases will be assessed based on your ability to thoughtfully apply course
concepts, your demonstrated comprehension of issues and drivers, and your ability to defend the decisions you make in the case. Mathematically, I am less concerned with correct or incorrect
answers, and more concerned with whether your answers are logical and defensible.
Exercises illustrating real-life financial risks will be assigned after every class, for individual completion. Exercises are designed to assess your understanding of course concepts and
quantitative methods described in the readings.
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Evaluation / Grading
Final Grade Scale
Specific grading criteria are posted on the course site for each of the assignments described above. Assignments will be graded with the stated criteria in mind on a 100-point scale. Assignments
and the instructor’s feedback will be posted in the course gradebook, which is accessible through the gradebook link at the top of the page. Assignment grades are typically posted within a week of
their due date. Announcements will be posted to let you know when to check your gradebook.
Total grade for the course will be calculated on the following deliverables:
Case Studies (Individual)
Case Study (Team)
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Policies & Expectations:
You are expected to participate fully in all course activities, including residencies, scheduled online sessions and the website.
All assignments must be submitted on or before the published due date. Without a compelling excuse submitted before the due date, 20 points will be deducted from any written assignment grade score
for each day past the due date.
Please contact me via email with any questions about the course. I appreciate ongoing feedback on how the class is going and any suggested changes.
Columbia University expects its students to act with honesty and propriety at all times and to respect the rights of others. It is fundamental University policy that academic dishonesty in any
guise or personal conduct of any sort that disrupts the life of the University or denigrates or endangers members of the University community is unacceptable and will be dealt with severely. It is
essential to the academic integrity and vitality of this community that individuals do their own work and properly acknowledge the circumstances, ideas, sources, and assistance upon which that work
is based. Academic honesty in class assignments and exams is expected of all students at all times.
Please note—Due to copyright restrictions, online access to this material is limited to instructors and students currently registered for this course. Please be advised that by clicking the link to
the electronic materials in this course, you have read and accept the following:
The copyright law of the United States (Title 17, United States Code) governs the making of photocopies or other reproductions of copyrighted materials. Under certain conditions specified in the
law, libraries and archives are authorized to furnish a photocopy or other reproduction.
One of these specified conditions is that the photocopy or reproduction is not to be “used for any purpose other than private study, scholarship, or research.” If a user makes a request for, or
later uses, a photocopy or reproduction for purposes in excess of “fair use,” that user may be liable for copyright infringement.
Columbia is committed to providing equal access to qualified students with documented disabilities. A student’s disability status and reasonable accommodations are individually determined based
upon disability documentation and related information gathered through the intake process. For more information regarding this service, please visit the University’s Health Services website: