Professional Documents
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Com Semester:
No. of Hours: 60 Hours Credits: 4
Subject: FINANCIAL RISK MANAGEMENT
Course Objectives:
FRM helps students to understand the basic risk involved in starting and running the business
and also provides the solution to deal with such financial risk problems. It also provides insight
on derivatives strategies which helps in dealing with investment risks
Module - 1 12 Hours
Introduction To Financial Risk Management.
Meaning of risk or exposure, financial risk and financial risk management. Objectives of
FRM. Types of risk. The process of risk management cycle.
Risk strategies and tools – Internal strategies, Risk sharing strategies and Risk transfer
strategies.
Module – 2 14 Hours
Statistical tools related to Risk Management
Introduction- Systematic and unsystematic risk. Risk measurement problems under CAPM
and Expected return, Standard deviation and Co-efficient variation. Problems on
variance, covariance and Beta calculation. Use of statistical tools to measure and reduce
the risk.
Module - 3 12
Hours
Financial Institutions and Derivatives
Introduction to Financial markets, institutions and Derivatives. Type of Derivatives in
risk reduction - Forwards and Futures, swap and Options. Types of swaps and option
swaps. FOREX market and risk reduction strategies in FOREX Market, Interest Rates
Swaps- Problems and solution on interest rate swaps.
Module - 4 12
Hours
Risk Measurement and Rating
Understanding Credit Risk - Introduction to Operational Risk or exposure and Country
Risk. Operational risk measurement and management -Hedging of operational risk.
Country risk- nature and methods of reducing country risk, Credit rating- meaning-
types- participants and 4C’s Credit rating. Factors to be considered in credit rating
process.
Module - 5 10 Hours
Management of international financial transactions risk or exposure
Introduction- Types of International financial exposure – Translation, transaction and
Economic exposure. Translation methods - managing transaction exposure, economic
and Translation exposure. Centralization and decentralization
Reference Books :
Course Outcomes: