PTMBA2024 Risk Management

All economics decisions are risky; therefore, managers need to estimate the different possible future outcomes of their decisions. This course introduces the concept of risk and the techniques of corporate and financial risk management. A key to these techniques is the understanding of probability distributions, which can be created through simulations. In addition, risk management is linked to the strategic management of a firm. Class discussions, different case studies, and a guest lecture illustrate the concept of risk, the techniques of risk management, and its importance.

OBJECTIVES OF THE CLASS

• Identification and definition of ‘risk’ in different contexts
• Realizing that risk perception is subjective and causes variance in decision making
• Quantification of ‘risk’ with various risk measures
• Identifying risks in business strategies
• Understanding the functionality of options, futures, and swaps
• Gaining knowledge about commodity market dynamics
• Understanding corporate and bank risk management

Session Information

Lessons Pack:The required course packet contains the material for the class (no pre-reading required).

Cases:Students have to work on different cases during the course. Cases will be handed-out in-class.

CLASS ETIQUETTE

• Reliability – Engagement, presence and timeliness are key pre-requisites
• Diversity – Take the opportunity to learn from each other
• Respect – for your colleagues and lecturers
• Trust – Confidentiality
• Enthusiasm – Enjoy the course, take part, try new ideas
• Professionalism – Behavior on highest standards
• Disturbances – Cell phone, BlackBerry, eBay only in the breaks; and no laptops during the guest session!

SESSIONS AND REFERENCES

Session I

• Introduction and Value Added of Risk Management
• Corporate Risk Management
• Case Business Strategy and Risk Management
• Scheduled: Guest Lecture by Gerold Grasshoff, BCG

Session I / II

• Hedging with Financial Derivatives
• Case Metallgesellschaft
• Case Real Option

Session II

• Scheduled: Guest Lecture by Jürgen Drebes, adidas AG

Session II / III

• Risk Management in Banking
• Case Risk Weighted Asset and Capital Charge
• Case Loan Pricing

Session III

• Exam Preparation

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Take Home Exam

Cases (30%)

Final Examination (50%)

The teaching style will be a combination of classical classroom teaching, group work on in-class cases, presentation, and discussion.