Financial risk management

INTRODUCTION

Financial Risk Management is the practice of creating economic value in a firm by using financial instruments to manage exposure to risk, particularly credit risk and market risk. In recent years, the globalization of financial markets, the emergence of international banking regulations and the rapid growth of new sophisticated products have dramatically elevated the role risk man

Program Description

This course examines modern techniques for managing financial risks. Financial risks are generally classified into market risks, due to movement in financial prices or volatilities, credit risks, due to fact that counterparties are unwilling or unable to fulfill their contractual obligations, liquidity risks, when transactions cannot be conducted at prevailing market prices, perhaps due to cash flow constraints, and operational risks, which arise from human or technical problems.

The course will cover measurement techniques for different types of financial risks (equity, fixed income, currency, commodity) and instruments. It will cover tools such as duration, portfolio beta, factor sensitivities, portfolio distribution analysis, and value at risk (VAR). It will also discuss how risk measurement tools can be used for active management of the risk/return profile of financial institutions.

Why Should Attend

The Financial Risk Management course will provide you with a solid foundation in the basic elements, strategies, and implications of derivatives, their products and terminology, as well as a better understanding of the effects of financial risk management on a firm′s investment and financing decisions and on its overall profitability. Throughout the course, you will learn how to do the following:

• Calculate and use standard deviation and variance to measure risk and estimate risk exposures
• Calculate factor betas and use factor betas to measure risk
• Interpret and use VaR and CaR measures of risk exposures
• Using simulations to evaluate risk
• Understanding of the yield curve
• Extract forward rates from the term structure of interest rates
• Construct market predictions of future interest rates from the term structure
• Calculate the duration and the DV01 of a bond
• Define immunisation
• Dealing with forward contracts
• Explain why forward exchange rates differ from spot exchange rates
• Explain covered interest rate parity
• Explain how to use forward contracts to hedge financial risk
• Define and explain forward rate agreements
• Recognise the difference between a futures contract and a forward contract
• Mechanics of futures trading
• Construct foreign currency hedges, interest rate hedges and commodity price hedges using futures contracts
• Recognise the difference between a strip hedge and a stack hedge
• Backwardation, contango and convergence

How You Will Benefit

A Financial Risk Management Certification will assist you to manage financial risk of your organisation. Financial risk is caused by changes in commodity prices, interest rates and currency exchange rates that affect the cash flows and market value of a company.

Managing financial risk involves identifying and measuring a company′s risk exposure, constructing policies for protecting the organisation from financial risk and then implementing and monitoring these policies. The role of the financial risk manager is one of the most important functions within a business.

Financial Risk Managers should have the ability to do the following:

• Define commodity price risk
• Define interest rate risk
• Define currency (foreign exchange rate) risk
• Create ways to manage risk for the company
• Identify how the management of risk will increase the value of a company

AFC Institute of Financial Management – AFC Vietnam
Address: 3rd – 10th Floor, Thang Long Building, 105 Lang Ha Street, Dong Da District, Hanoi city
Phone: +84 4 3562 7486
Fax: +84 3562 7487
Email: info@afc.edu.vn
Website: //afc.edu.vn/      //acca.edu.vn/      //financialpro.vn/