Course Syllabus

 

ENTERPRISE RISK MANAGEMENT SYLLABUS

ECON E- 1477

Instructor: Cheryl Dubin  

Email: Ctutun@comcast.net

Office Hours by Appointment

Cell Phone: 617-733-0883

Class: Online Tuesday 5:30 – 7:30

 

Course Description

This course will provide an understanding and application of quantitative (Financial) and qualitative (Enterprise) methods of analyzing and managing risk within organizations.  Learn to apply multiple risk management tools to make high quality decisions for balancing corporate risk and reward tradeoffs.  

• Financial risk topics will include the examination of derivative application uses for hedging risk, measuring Value at Risk and exploring external impacts such as market, credit and systemic risks.   
• Enterprise risk topics will include constructing frameworks for managing strategic, operational and outsourcing of business risks. Students will examine ways to assess and measure risk along with organizing corporate governance policies. 

Learning goals and outcomes

The goal of this course is to provide students a general overview of the risks business face and equip them with a set of frameworks and methodologies for assessing and mitigating these risks. Application and discussion of the risk management practice is critical to develop understanding of risk parameters and developing decision making skills.   The course will provide students:

• Overall understanding of the role risk plays in managing corporate performance
• Uses financial derivatives to hedge portfolio/corporate risk
• Identify and analyze risks faced by an entity and dissect real business cases requiring use of corporate governance, operational and reputational risk management techniques
• Application of Risk Frameworks to an organization

Course Mechanics

In general, the course will follow the outline listed in the Syllabus. Reading assignments (textbook and reading notes) are to be completed prior to class and are designed to help students participate in meaningful class discussion regarding selected topics.  Current events and readings may also be used throughout the course and will be referenced during class. Additional cases will be used for both class and for exams.

Prerequisites

Prerequisites: ECON E-1500or ECON E-1920 or ECON E-1941.

Graduate/Undergraduate Credit

Graduate students must complete the Corporation Study and present recommendations to the Class

Evaluations 

 

Mid-term exam:	20%	Financial Risk Management - Graduate & Undergraduate Version
Final exam:	30%	Full Term Content & Enterprise risk case “You are the Chief Risk Officer”
Case Studies & Class Participation	30%	Participation will be evaluated by meaningful contribution to class discussion and timely completion of weekly reading assignments. Assignments will include case and readings to complement weekly topics.   Class members will be divided into teams to present cases and lead discussions. Graduate Students may be assigned write ups as indicated by instructor
Corporation   Study for Graduate Credit	20%	Individual case analysis of a corporation implementing a new risk management framework for their organization.   The proposal will include risk metrics, models, organization structure and decision processes. Undergraduates will evaluate the Content as the Board of Directors.

Required materials

Text:    Enterprise Risk Management, by Frasier and Simkins - Kolb Series in Finance, 2010 (Wiley)

 HBS Case/Reading Package: http://cb.hbsp.harvard.edu/cbmp/access/56679706

• Case:     Case: Barclays and the LIBOR scandal
• Case:     Tip of the Iceberg: JP Morgan and Bear Stearns (A)
• Read:     JP Morgan and the CIO Losses
• Case:     Risk Management at Wellfleet Bank. All That Glitters is Not Gold
• Case:     The Fall of Enron
• Case      Executive Compensation at General Electric

Optional Background Notes for Graduate Students:  

Note: Derivate Markets Structure & Risk

Note: Interest Rate Derivatives

Note: Foreign Exchange Markets and Transactions

 

Cheating and Plagiarism

You are responsible for understanding Harvard Extension School policies on academic integrity (www.extension.harvard.edu/resources-policies/student-conduct/academic-integrity) and how to use sources responsibly. Not knowing the rules, misunderstanding the rules, running out of time, submitting the wrong draft, or being overwhelmed with multiple demands are not acceptable excuses. There are no excuses for failure to uphold academic integrity. To support your learning about academic citation rules, please visit the Harvard Extension School Tips to Avoid Plagiarism (www.extension.harvard.edu/resources-policies/resources/tips-avoid-plagiarism), where you'll find links to the Harvard Guide to Using Sources and two free online 15-minute tutorials to test your knowledge of academic citation policy. The tutorials are anonymous open-learning tools.

Accessibility

The Extension School is committed to providing an accessible academic community. The Accessibility Office offers a variety of accommodations and services to students with documented disabilities. Please visit www.extension.harvard.edu/resources-policies/resources/disability-services-accessibility for more information.

 Course Outline

 

Session	Topics	Readings/Assignments
1 Jan 24	Class overview Definitions of Risk – Financial & Enterprise	·  Prepare write up of Case:   Barclays and the LIBOR scandal
2 Jan 31	Financial Risk for Corporations: Interest Rate and Credit Risk	·  Text: Enterprise Risk Management Chapter 14, 15
3 Feb 7	Financial Risk Applications for assessing clients and capital uses: ·  Bank Capital, Credit, Ratings	·  Text: Enterprise Risk Management Chapter 18, 19
4 Feb 14	Financial Risk Tools: ·  Futures/Forwards, Swaps/Options, FX	·  Text: Enterprise Risk Management Chapter 25 ·  Case: Risk Management at Wellfleet Bank. All That Glitters is Not Gold
5 Feb 21	Measuring Risk ·  Value at Risk ·  External Market/Trading/Liquidity Risk	VAR article: http://www.nytimes.com/2009/01/04/magazine/04risk-t.html?pagewanted=all&_r=0
6 & 7 Feb 28 March 7	Managing Financial Risk and the Regulatory Environment	·        Case: Tip of the Iceberg: JP Morgan and Bear Sterns ·        Reading: JP Morgan and the CIO Losses
8 Mar 21	Financial Risk Mid Term Quantitative methods and decisions in managing risk
9 Mar 28	Systemic Risk & Risk in Crisis ERM Definitions & Introductions Strategic Planning and Frameworks	·  Text: Enterprise Risk : Chapter 3,7
9 April 4	Organizing, Managing, and Governing the Risk Management Function, KRI/Policies. The role of the CRO	·  Text: Enterprise Risk Management Chapter 4, 5, 8, 12 ·  Case The Fall of Enron
10 Apr 11	Risk External and Internal Impacts: Outsourcing, Suppliers, Operations	·  Text: Enterprise Risk Management Chapter 16
11 Apr 18	Risk Assessment Tools: Profiles, Tolerances, Application/Measurement	·  Text: Enterprise Risk Management Chapter   9, 11, 13 Case:   Executive Compensation at General Electric
12 Apr 25	Enterprise Risk analysis of selected corporation	Team presentations Graduate Students, write ups
13 May 2	Pulling it all together Course Recap and Final Overview	·  Text: Enterprise Risk Management Chapter 25
14 May 9	Final Exam Comprehensive exam – Financial and Enterprise risk