MAC2602 - Principles Of Strategy, Risk & Financial Management Techniques Revision Jan 2022.

MAC2602 - Principles Of Strategy, Risk & Financial Management Techniques Revision Jan 2022. 1. Explain the fundamentals of risk management from the theoretical and instruments aspects; 2. Describe credit risk, market risk and operational risk in terms of fundamental objectives, framework, strategy, monitoring and control; 3. Analyse the relationship between risk category and practical implementation challenges; and 4. Discuss the characteristics of various types of derivative instruments used in risk management. QUICK RECAP Lectures 1 to 5: • Intro, fundamentals  Risk, uncertainty, risk management  Typology of risks  Principles and framework • Process  Application of policies, procedures, practices to the activities of communicating & consulting, establishing the context, assess, treat, monitor & review • Credit risk • Credit risk identification: loans, investment securities, off balance sheet, derivatives, portfolio credit risk • Basel accord and external credit rating systems QUICK RECAP Derivatives, CDS and Long Term Capital Management: • Derivatives  definition  use: risk exposure = hedge (swap, futures, option)  abuse • CDS  What, how is it used?  Contribution to Global Financial Crisis • LTCM  Background  What went wrong – internal, external  The use of interest rate swaps and derivatives  lessons learnt - items & consequences/implications.