BUS453 Enterprise Risk Management: Principles and Methods
Part I - Principles
- Introduction to enterprise risk management
- Endogenous and exogenous risks and identification of risk factors
- Risk and uncertainty: perception and communications
Part II - Methods
- Risk, uncertainty and profits. Risk adjusted capital allocation
- Measuring and hedging risks. The use of financial derivatives and insurance
- Regulations: Basel III, Environmental Legislation, Software engineering, EU Directives
Part III - Applications and case studies
- Risk management for financial institutions
- Supply chain risk management
- Risk management in shipping
- Environmental risk management
- Risk management for energy systems
- Cyber security and technological risks
- Project risk management and software engineering
The course will familiarize students with the principles of (i) risk identification and measurement, and (ii) risk management, as applied in diverse business settings in financial institutions, supply chain management, power planning and the environment, software and industrial projects. Students will become familiar with the latest analytics, corporate governance policies and regulatory tools. The aim is to learn how to effectively implement an enterprise-wide risk management program in order to hedge various types of business risks, allocate capital, and evaluate risk-adjusted performance.
After completing the course students will understand the principles, corporate governance policies, regulatory tools and principal analytics available to corporations and policy-makers for mitigating risks. They will be able to explain the principle of duality that states that risk management entails either removing the risk or hedging its costs, and compare its application in different business settings. They will learn to list and describe the major sources of risk in modern business environment and how to effectively implement an enterprise-wide risk management program. They will also learn to report on the use of financial derivatives and insurance to mitigate the adverse impacts of risk. Students will be able to analyze the tradeoffs between eliminating risks or hedging their impact in diverse business settings in financial institutions, supply chain management, shipping, energy planning and the environment, software and industrial projects.
Teaching will consist of lectures (85%) and cases (15%) and maybe a guest lecturer from industry.
Students will be following breaking news relating to risk management from major international sources such as World Economic Forum, Wall Street Journal, Reuters Risk, Risk, Financial Times. There will be frequent tweets from the instructor @StavrosZenios under hashtag #enterpriserisk.
Good standing in the Masters program
Requirements for course approval
Requirements for course approval
For course approval, there may be a requirement to successfully complete two mandatory homeworks (approved/not approved) in time. Details will be given during the course.
The final grade will consist of a written 4 hour school final exam (100%). The exam language is English and all answers need to be in English as well.
Computer requirements / tools
Basic Excel, Word, PowerPoint
Spring. Utgår. Siste gang våren 2017
- Covello,V.T. and Mumpower,J., "Risk analysis and risk management: An historical perspective", Risk Analysis, 5(2):103-120, 1985.
- Crouhy,M., Galai,D. and Mark,R. The Essentials of Risk Management, McGraw-Hill, 2007. (Chapters 1-5, 7-8, 13-15)
- Doherty,N. Integrated risk management, McGraw-Hill, 2000. (Chapters 3, 6-8)
- Zenios,S.A., Practical Financial Optimization: Decision making for financial engineers, Blackwell-Wiley Finance, 2008. (Chapters 1,2,9.)
- Albertijn,S., Bessler,W. and Drobetz,W., Financing Shipping Companies and Shipping Operations: A Risk-Management Perspective, Journal of Applied Corporate Finance, 24(4):70-82, 2011.
- Hopkin,P. Fundamentals of Risk Management: Understanding, evaluating and implementing effective risk management, The Institute of Risk Management, 2012. (Chapters 28-29).
- Kammen,D.M and Hassenzahl,D.M., Should we Risk it? Exploring environmental, health and technological problem solving, Princeton University Press, 2001. (Chapters 8, 10).
- Beck,U., World at Risk, Polity Press, 2009.
- Bernstein,P.L. Against the Gods: The remarkable story of risk, Wiley, 1998.
- Ip, G. Foolproof. How safety can be dangerous and how danger makes us safe , Little Brown and Co., 2015.
- ECTS Credits
- Teaching language
Stavros A. Zenios