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Risk Management

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Risk Management

Issues

ELECTIVE- RISK MANAGEMENT

Subjects:-

 Risk Management- Paper 1st

 Risk Management and Financial Institutions- Paper 2nd

Curriculum of Risk Management- Paper 1st       (IBM- E1071)

S.No.

Topics

 1

Introduction to Risk Exposure-Risk Identification and Analysis:-Introduction, Objectives, About the Risk in Business, Risk Identification, Project Risk, Risk’s Nature, Causes of Risk, Sensitivity Analysis Based on Several Variable Factors, Break Even Analysis, Simulation and Sensitivity, Decision Tree Method, Analysis of Risk by Financial Institutions.

2

Risk in Banks:-Introduction, Objectives, Risk Management Need in the Banks, Operational Risk, Operational Risk Components, Management of Operational Risk-Control, Operational Risk Management Based on Basel II Documents, Management Overview, Framework, Risk Monitoring And Control, Risk Quantification, Scenerio Analysis-Basel II Guide Lines, Integrated Risk Management, Management Approach, RBI Guidance, Credit Risk in Bank. Market Risk Management, Liquidity Risk.

3

Risk Management in Insurance Company:Introduction, Objectives, Background, Defining Risk in Insurance, Stages of Risk Management, Risk Inspection, Objective of Risk Coverage, General Insurance Related Corporate and their role in Loss Mitigation, Good House Keeping, Fire Protection, Fire Prevention on Site-Check List, Risk Reduction by Site Monitoring, Probabilities, Risk Factors, Monitoring and Its Uses, Maintenance Helps in Prevention of Losses, Better Maintenance Practices, Legislative Support, Re-insurance, Process of Re-insurance, Excess of Loss Reinsurance, Problem faced in Engineering Insurance, Re-insurance of Engineering Business.

4

Currency Risk Management-Application of Swap-Managing Swap Book:-Introduction, Objectives, Currency Risk Management, SWAPs, Types of SWAPS, More about Swaps, Replacement Value of an interest Rate Swap, Swap-spread, Swap Dealers, Currency Swaps, Cautions, The Comparative Advantages, Swap Book-Accounting System, Financial Statements, Shareholders’ Equity, Investments-Us Gaap, Investment: IFRS, Consolidation: Variable Interest Entities, Business Combination.

5

Risk Management in Service Sector Companies:-Introduction, Objectives, client Concentration Risk, Customer Satisfaction in India, Competition Analysis.

6

Value at Risk:-Introduction, Objectives, Value at Risk Definition And Uses, Sources of Market Risk, Market Risk Model, Applications of Market Risk Measurement Techniques, Value at Risk(Var) Techniques, Application of Var, Market Risk Management in Financial Institutions, Concept of Cash Flow Var, Using Cash Flow Var in Hedging/Risk Management.

7

Credit Derivative:-Introduction, Objectives, Credit derivatives-where It Stands, Credit Derivatives-histrograph, Global Past Trend of Credit Derivatives, Credit Derivatives-ITS Details, Credit Default Swap, Credit Link Notes(CLN), Collateral Debt Obligation(CDO) and Collateral Loan Obligation(CLO), Total Return SWAP(TRS), Credit Derivative Buyer, Credit Derivative in India-its Prospective, Participant’s Nature-Indian market, Corporate Governance, Rrisk Management, Rlimiting The Risks, Credit Limit for Banks, Credit Derivative Risk.

8

Application of Commodity Drivatives for Risk Management:-Introduction, Objectives, Status of Forward Contract, Basic Risk Management, Commodity Forward Contracts, Interest Rate Parity Theorems, Forward Price General Formula, The Alternatives, Counter Party Risk, A Suitable Case Future Contracts, Accounting Future Contract, Other Areas of Consideration, Counter Party Risk, Physical Delivery, Future Contracts Its Pricing, Long Swiss Franc Futures Position During March 1999 in the June 1999 Contract, Problem Faced, Mark To Market Credit Gain.

 

 

 

 

Curriculum of Risk Management and Financial Institutions- Paper 2nd     (IBM- E1072)

S.No.

Topics

 1

Financial Institutions:-Financial Intermediation, Rationale for Financial Intermediation, Importance of Financial Intermediation, Categories of Financial Institutions, Regulation of Financial Intermediaries.

2

Depository Financial Institutions:-The Statutory Framework, Structure of the Indian Banking Industry, Composition of SCB Balance Sheets, Performance of Indian SCBs.

3

Non-Depository Financial Institutions:-Finance Companies, Insurance Companies, Mutual Funds.

4

Bank Products:-Commercial Credit, Retail Credit, Deposits, Fee-Based Products.

5

Bank Financial Statements:-Statutory Framework for Financial Statements, Components of Bank Balance Sheets, Components of Bank Profit and Loss Statements, International Accounting Standards for Banks.

6

Performance Analysis of Banks:-Background Factors for Performance Analysis, Ratio Analysis for Banks and Finance Companies, ROE Model for Profitability Analysis, CAMELS-An Integrated Scorecard for Banks, Performance Ratios of Indian Scheduled Commercial Banks.

7

Introduction to Risk Management:-Assets Liability Risks, Portfolio Risks, Operational Risk, Solvency Risk, The Process of Risk Measurement and Mitigation.

8

Market Risk:-Value-at- Risk, Exposure Mapping, Identifying Risk Factors, Projecting Changes in Market Prices of Risk Factors, Parameters for VaR, Stress Testing, Market Risk Management.

9

Interest Rate Risk:-The Target Variable, Sources of Interest Rate Risk, Exposure Measurement, Grasping the Range and Likelihood of Possible Outcomes, Stress Testing, Management of Interest Rate Risk.

10

Credit Risk:-Traditional Approaches to Measuring Credit Risk, Measuring Credit Risk- The Var Approach, Measuring Credit Risk –Other Approaches, Credit Risk Management.

11

Operational Risk:-Operational Risk Data, Measuring Operational Risk, Managing Operational Risk.

12

Liquidity Risk:-Sources of Liquidity Risk, Constructing the Forward Payment Structure, Assessing the Range of Possible Outcomes, Measuring the Bank’s Counter Balancing Capacity, Managing Liquidity.

13

Hedging Risks at Bank:-Tools for Hedging Interest Rate Risk, Tools for Hedging Credit Risk, Securitization.

14

Managing Bank Capital:-Economic Capital, Measuring Economic Capital, Implementing an Economic Capital Framework, Allocating Economic Capital.

15

Based I-The Capital Accord:-Scopes of Application of Accord, Constituents of Capital, Treatment of Credit Risk, Treatment of Market Risks, Prudential Norms for Capital Adequacy in India.

16

Based II- The New Accord:-Scope of Application of the Accord, Minimum Capital Requirement for Credit Risk, Credit Risk Mitigation, Minimum Capital Requirements for Operational Risk, The Second Pillar –Supervisory Review Process, The Third Pillar- Market Discipline.

17

Trends in the Banking Industry:-Deregulation, Mergers, Diversification, Technology.

 

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