Corporate Finance and Risk Management

Academic Program: 
Course Term: 
1st year
Term: 
Winter
Credits: 
2.0
ECTS credits: 
3.0
Status: 
Elective
Course Description: 

Companies are exposed to a variety of financial risks, including interest rate, inflation, currency, credit (counterparty), commodity and M&A-related risks. The last decade has brought about fundamental changes in how these risks are viewed, identified and managed by top corporations. However, modern risk management practices remain seldom discussed and little understood in the broader business community, especially in emerging markets. This presents a major competitive disadvantage in the post-crisis world, where companies with controlled exposures to volatile financial markets enjoy a more stable operating environment, lower earnings volatility, and a lower risk of financial distress.

This course introduces to modern risk management from the perspective of non-financial corporations. You will learn (i) what risks companies should manage and why, (ii) how risk management policies should be developed and organized, and (iii) how the various types of risk can be measured and managed. In the process, you will gain critical new insight into the operational problems that today’s corporations face, and how financial market conditions interact with corporate performance and decision making. To highlight the practical relevance of the course materials, we will discuss case studies throughout.

Understanding the problems covered will be helpful to everyone seeking a career in finance, including as company officers (CEOs, CFOs, CROs, treasurers and beyond); accountants, consultants; corporate bankers, coverage officers, corporate financiers, private equity investors.

Learning Outcomes: 

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Core Learning Area

Learning Outcome

Interpersonal Communication Skills

Participate in class discussions and problem solving exercises. Present arguments and findings. Objectively critique findings of fellow students.

Technology Skills

Use of MS Excel tools in problem solving. Use of Thomson Reuters Eikon and specialist software will be strongly encouraged.

Cultural Sensitivity and Diversity

Harness international and professional diversity of students in viewing issues and problems from different perspectives.

Quantitative Reasoning

Apply factor models, Monte Carlo simulations, VaR and other techniques.                                                                                        

Critical Thinking

Exercise the powers of inquiry, logical thinking and critical analysis. Question the applicability of conventional prescriptions, as well as the impact of non-quantitative information.

Ethics and Social Responsibility

Evaluate and discuss challenges related to corporate governance, social responsibility and ethical and professional behavior.

Management Knowledge and Skills

Acquire a comprehensive understanding of risk management decision making. Learn a range of financial and accounting concepts that practitioners in the field use and apply.

Assessment: 

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Grading will be based on the total score out of 100, in line with CEU’s standard grading guidelines.

  • Group project (40%)
  • Class participation and problem solving (20%)
  • Final exam (40%).


 

Group project

Students will be asked to form groups of 4-5, and analyze a non-U.S. publicly listed firm cross-listed on a U.S. stock exchange along the broad topics discussed in class. Details will be formally announced and discussed in the first lecture.

Class participation and problem solving

Class participation includes attendance, attitude, and volunteered and cold call responses. All reading assignments should be completed PRIOR to the class we cover them in.

The case method is often uncomfortable to students given the inherent uncertainty of having to make choices with limited information at hand. Please note that there are often no “right” answers.

Final exam

There will be ONE closed-book final exam, to be held in the final lecture. The exam will be a one-hour paper with multiple choice or open-ended essay questions.

Prerequisites: 

- Finance