BUSI3441: Enterprise Risk Management: Principles, Methods and Applications

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• The course will familiarize students with the principles of risk identification and measurement, and risk management, as applied in diverse business settings in supply chain management, power planning, financial institutions, the environment, software and industrial projects. They will develop an appreciation of ways to deal with overarching risks from cybersecurity, climate change, and political uncertainty. Students will be exposed to analytics such as scenario analysis and stress testing, corporate governance policies, and regulatory tools. The aim is to learn how to effectively implement an enterprise-wide risk management program to hedge various types of business risks, allocate capital, and evaluate risk-adjusted performance.

• Part I. Principles.
• 1. Introduction to enterprise risk management: culture, corporate governance, compliance.
• 2. Endogenous and exogenous risks and identification of risk factors
• 3. Risk and uncertainty: perceptions and communication.
• 4. Climate change risks
• 5. Political risk
• Part II. Methods.
• 6. Measuring risk. Risk-adjusted capital allocation
• 7. Hedging risks. The use of financial derivatives and insurance
• 8. Regulations: Basel III, Solvency II, Environmental Legislation, legal risk
• Part III. Applications.
• 9. Risk management for financial institutions
• 10. Supply chain risk management
• 11. Environmental risk management
• 12. Risk management for energy systems 1
• 13. Cybersecurity risks
• 14.Case studies and breaking news
• 15.Case studies, such as those below from Harvard Business School, will be used as part of the student assessment process. We will also be covering breaking news. We will focus on real-world examples of failed responses because we learn more from mistakes than from the dog that did not bark.
• 16.Managing risks to ensure business continuity at Maryland and Virginia milk producers - Enterprise risk management at HydroOne: How risky are smart meters?
• 17.JP Morgan Private Bank risk management during the Great Financial Crisis - Environmental risk management at Chevron Corp.

Subject-specific Knowledge:

• The major sources of risk in todays world
• Governance, regulations, and analytics (stress testing, scenario analysis, Value-at-Risk) for mitigating risks by corporations.
• Complementary roles of financial derivatives and insurance

Subject-specific Skills:

• Ability to list and describe well-known risks and identify new ones.
• Ability to describe basic risk management regulations and their rationale, and to describe critically analytics such as stress testing, scenario analysis, Value-at-Risk.
• Ability to analyse and present real-world case studies incorporating the acquired knowledge.

Key Skills:

• Cognitive skills of critical thinking, analysis and synthesis, including the ability to identify assumptions, evaluate statements in terms of evidence, to detect false logic or reasoning, and to define terms adequately and to generalise appropriately
• An ability to apply theories and frameworks to problems relating to enterprise risk management.
• Ability to use social media as a source of information related to risk management and its pitfalls, research library and media for appropriate journals, publications, websites, books and other reference material.
• Communicate effectively in writing and orally.

• Teaching is by way of lectures with research-led content, real-life examples and seminars. Learning takes place through attendance at lectures, preparation for and participation in seminar classes, and private study. Students will be asked to work on a major case study during the second half of the course. Throughout the module, careful attention will be paid to grounding the discussion of relevant theory and academic content in practice and real-life examples especially fron ongoing affairs. Classes will also accommodate questioning and debate. Active participation is encouraged.
• Formative assessment is by means of the preparation of a seminar presentation for a case study and delivery of the written presentation
• Summative assessment is by means of a written examination and a 2-minute elevator pitch video to assess the ability to present the concepts learned in class and analyzed in their case study

Students will analyse a case study working in groups of no more than 5 people and typically 3. They will give a 20 minute presentation during the seminars and submit a structured PowerPoint presentation. They will submit a 120 sec elevator pitch video of their case study upon completion of the course.

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