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The Mechanics of Risk Management

IFF - International Faculty of Finance
Course summary
16 weeks
1,999 GBP excl. VAT
Part time
Online courses

Suitability - Who should attend?

The Mechanics of Risk Management - Distance Learning Course is designed for anyone working in risk management requiring a better understanding of the fundamentals of risk concepts and operations.

Training Course Content

The Mechanics of Risk Management - Distance Learning Course is designed to cover the following key topics:

Module 1: Introduction to Risk Management

  • The contrast between risk and uncertainty
  • Principal types of enterprise risk 
  • Risk management as part of an organisation's culture
  • Methodological principles of Value at Risk (VaR) as indicator of portfolio risk
  • The need for an integrated approach to risk management  in the aftermath of the 2008 financial crisis.

Module 2: Interest Rate and Currency Risk

  • Key drivers affecting portfolio risk from variations in interest rates and foreign exchange
  • Mathematics underlying risk of fixed income instruments: banks, asset managers, borrowers and lenders
  • Foreign exchange forward rates, covered interest parity, how to hedge risk of assets/liabilities denominated in foreign currencies
  • Explain the key concepts behind managing interest rate risks with swaps
  • Explain the key concepts of duration, convexity, interest rate hedging and portfolio immunisation

Module 3: Market Risk

  • Symbiotic relationship between financial risk and investment returns 
  • Differentiate between systematic risk and idiosyncratic risk
  • Capital Asset Pricing Model (CAPM) view of risk management and Modern Portfolio Theory (MPT)
  • Strengths and weakness of such theories especially in the wake of the 2007/9 financial crisis.
  • Explore the view that for relatively uncorrelated asset returns there can be considerable risk reduction achieved through portfolio construction techniques designed to achieve diversification from combining assets in a systematic fashion
  • Explain the key characteristics of risk adjusted returns

Module 4: Credit Risk

Learning Objectives

  • Contrast between the notion of liquidity used by accountants in assessing balance sheet liquidity and the very different notion relating to depth and quality of transaction facilitation in financial markets
  • Contrast between normal market liquidity conditions enabling transactions to be conducted with minimal transaction costs, temporary bouts of illiquidity which impair ability to transact, and critical episodes of illiquidity in which markets “seize up”
  • Explain the linkage between maturity transformation and financial intermediation and the necessary presence of reasonably liquid markets
  • Explore as a case study the dysfunctional nature in late 2008 of money markets for inter-bank funding, repos, commercial paper and “normal” arbitrage operations

Module 5: Operational Risk

  • Illustrate how enterprises have substantial risks
  • Illustrate with actual examples how operational failures from financial institutions
  • Examine the loss scenarios of operational failures on both financial and non-financial enterprises and what internal control procedures

Module 6: Credit and Counter-Party Risk

  • Examine the various facets of credit risk which hinge on losses sustained from failure of a counter-party to honour contractual obligations
  • Distinguish the separate components of credit risk:
  • Understand the mechanics of credit default swaps
  • Understand the concepts of credit rating and scoring, the role of the major Credit Ratings Agencies (CRA’s), methods used to determine credit ratings, implications of ratings downgrades, how useful are ratings for determining actual risk of default?

Module 7: Systemic and Sovereign Risk

  • Examine the dilemma that linkages between financial intermediaries may, up to a point, contribute to systemic stability
  • Outline the observations that kurtosis and skew of financial asset returns leads to left tail dependencies with heightened probability of joint defaults in a liquidity crisis which can be systemically threatening.
  • Illustrate how systemic risk might can emerge from a common shock (exogenous or endogenous?).

Module 8: Regulation and Risk Management

  • Statutory regulation is a primary method by which safeguarding the public interest in risk management is implemented in modern economies
  • Regulations pertaining to risk control at the national and trans-national levels and examine the dichotomy that regulation by nation states must contend with 
  • National  vs transnational financial risks
  • Examine the role of major global regulators, supervisory and (quasi) regulatory bodies
  • Major statutes underpinning regulations of financial and non-financial enterprises and review proposed measures and accords
  • Examine the practice of regulatory arbitrage

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About provider

International Faculty of Finance - IFF Finance & IFE Energy - Specialist Training Courses

As one of the world's leading specialist financial training organisations, The International Faculty of Finance, provides participants in the global financial markets with intensive technical training programmes designed to help them succeed on the global stage.  Established in 1991 we...

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Contact info

IFF - International Faculty of Finance

Maple House 149, Tottenham Court Road
W1T 7AD London

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Average rating 4.8

Based on 5 reviews.

Nick Theodorakos
I recently began a new role and am very thankful for the course as it aligned surprisingly well with the functional role I am now playing. I enjoyed the format and would not change much. That said I have taken some classes online that have an live workshop component where there are dial-in classes that allow for live instruction and Q&A.
Nicholai Cumbo
My Favourite part was the assignment, as it allowed me to dig in deeper in certain topics and get a better understanding on those topics.
Sameena Abdul sattar
Liquidity adjusted VaR great - very relevant to my area of work and has enlightened me with knowledge, It is an achievement to progress in your career
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