Cambridge
Academy
In London

Course Type: Classroom-based Course 

Code: FM24Q925

Duration: 2 weeks

Fee: £6200 (Inc. VAT) 

Date: 08 – 19 Dec 2024

City: London 

Course Overview 

This 10-days course delves into financial risk management, equipping professionals with the skills to identify, assess, and mitigate financial risks. Through a blend of theoretical knowledge and practical applications, participants will gain insights into risk management frameworks, financial instruments, and strategies to protect their organisations' financial health.

Target Audience 

●      Financial analysts and risk managers

●      Investment professionals and portfolio managers

●      Corporate finance and treasury teams

●      Financial auditors and compliance officers

●      Banking and insurance professionals

   Course Objectives 

●      To understand the principles and frameworks of financial risk management.

●      To identify and assess various types of financial risks, including market, credit, and operational risks.

●      To develop strategies for mitigating and managing financial risks.

●      To utilise financial instruments and tools for risk management.

●      To analyse case studies and real-world scenarios to apply risk management techniques.

Day 1: Introduction to Financial Risk Management

• Topics Covered:
• Definition and types of risks (Market, Credit, Operational, Liquidity, etc.)
• Importance of risk management in finance
• Overview of regulatory bodies (e.g., Basel Committee)
• Activities:
• Case study on a major financial crisis (e.g., 2008 Global Financial Crisis)
• Practical Exercise: Identify different types of risks from a real-world scenario.
• Goal: Understand the basics of risk and why managing it is essential.

Day 2: Risk Measurement and Quantification

• Topics Covered:
• Value at Risk (VaR): Concepts, calculation, and limitations
• Expected Shortfall (ES)
• Other risk measures: volatility, stress testing
• Activities:
• Review and discuss the pros and cons of VaR and ES.
• Practical Exercise: Calculate VaR and Expected Shortfall for a hypothetical portfolio.
• Goal: Learn to quantify risk using basic tools.

Day 3: Market Risk

• Topics Covered:
• Components of market risk: interest rate risk, equity risk, currency risk
• Measurement tools: Delta-normal VaR, historical simulation, and Monte Carlo simulation
• Activities:
• Case study on market risk management failure (e.g., LTCM).
• Practical Exercise: Calculate the impact of interest rate changes on a bond portfolio.
• Goal: Understand market risk and how to quantify it.

Day 4: Credit Risk Basics

• Topics Covered:
• Credit risk concepts: default risk, credit spread risk, counterparty risk
• Credit ratings and credit scoring models
• Probability of Default (PD) and Loss Given Default (LGD)
• Activities:
• Discuss credit ratings and their role in financial stability.
• Practical Exercise: Analyze a company’s credit risk using its financial ratios.
• Goal: Learn the essentials of assessing and managing credit risk.

Day 5: Advanced Credit Risk Management

• Topics Covered:
• Credit risk modeling: CreditMetrics, Credit VaR
• Credit Default Swaps (CDS) and other credit derivatives
• Collateral and netting agreements
• Activities:
• Case study on credit risk during the 2008 crisis (e.g., Lehman Brothers).
• Practical Exercise: Calculate Credit VaR for a portfolio.
• Goal: Dive into advanced credit risk management tools and their applications.

Day 6: Operational Risk

• Topics Covered:
• Operational risk sources: people, processes, systems, and external events
• Measurement and management strategies
• Key Risk Indicators (KRIs)
• Activities:
• Case study on operational risk failure (e.g., Barings Bank collapse).
• Practical Exercise: Develop an operational risk matrix for a financial institution.
• Goal: Understand operational risk and how to mitigate it.

Day 7: Liquidity Risk Management

• Topics Covered:
• Types of liquidity risk: funding liquidity risk and market liquidity risk
• Liquidity stress testing
• Regulatory guidelines (e.g., Basel III liquidity coverage ratio)
• Activities:
• Discuss recent liquidity challenges in the banking industry.
• Practical Exercise: Assess liquidity risk using the balance sheet of a bank.
• Goal: Gain insights into liquidity risk and tools for managing it.

Day 8: Regulatory Frameworks and Capital Requirements

• Topics Covered:
• Overview of Basel Accords: Basel I, II, III
• Capital Adequacy Ratio (CAR), RWA, and leverage ratios
• Stress testing and scenario analysis
• Activities:
• Discuss the role of stress testing post-2008.
• Practical Exercise: Calculate the CAR for a hypothetical bank.
• Goal: Familiarize with regulatory guidelines and capital requirements.

Day 9: Risk Management Tools and Software

• Topics Covered:
• Overview of risk management software and tools (e.g., Bloomberg, MSCI RiskMetrics, MATLAB)
• Applications in daily risk assessment and monitoring
• Pros and cons of different risk management software
• Activities:
• Demonstration of a popular risk management tool (if accessible).
• Practical Exercise: Conduct a risk assessment using a simulated risk management tool.
• Goal: Understand the practical use of software tools in risk management.

Day 10: Integrated Risk Management and Emerging Risks

• Topics Covered:
• Integrated risk management approach
• Emerging risks: climate risk, cybersecurity, geopolitical risk
• Enterprise Risk Management (ERM) and future trends
• Activities:
• Case study on climate risk or cybersecurity impact on finance.
• Practical Exercise: Develop a basic ERM framework for a financial institution.
• Goal: Gain insights into comprehensive risk management strategies and emerging trends.

The Certificate 

After attending and completing the entire training course with Cambridge Academy in London, delegates will be issued a Certificate of Completion