Risk Management

This course discusses risk management from the perspective of non-financial corporations. The course starts with a clear identification of the different sources of risk firms are exposed to, and shows how hedging of these risks can increase firm value. As a decision to hedge or not depends upon the likelihood certain risks materialize, the course also provides the students with a basic understanding of the determinants of the most important risk factors, i.e. exchange rate and interest rate risk. Next, the course introduces the students to various hedging tools, such as swaps, futures, and options. While the focus of the course will be mainly on managing exchange rate and interest rate risk, we will also consider other sources of risk, such as credit, commodity and market risks. Apart from introducing the basic concepts, this course will provide numerous empirical examples and case studies.