BAFN307 - Financial Risk Management

Year

Credit points

Campus offering

Prerequisites

BAFN200 Principles of Finance

Teaching organisation

Unit rationale, description and aim

The unit is a foundation unit for understanding financial risk management. This unit introduces the student to the different types of risks faced by corporations and frameworks for assessing and mitigating those risks. Students need to understand the concepts of risk measurement and evaluation, risk management in the board room, enterprise risk management, risk exposures and mitigation. Students will develop skills in identifying and managing risks. You will be to apply derivatives to generate the risk mitigating plans of firms in the context of an ethical perspective. This unit provides you with necessary knowledge and skills needed to get work ready for a career in the banking and finance industry.

Learning outcomes

To successfully complete this unit you will be able to demonstrate you have achieved the learning outcomes (LO) detailed in the below table.

Each outcome is informed by a number of graduate capabilities (GC) to ensure your work in this, and every unit, is part of a larger goal of graduating from ACU with the attributes of insight, empathy, imagination and impact.

Explore the graduate capabilities.

On successful completion of this unit, students should be able to:

LO1- assess risk governance, risk management and enterprise risk management with consideration to the common good (GA2, GA5).

LO2 - critically analyse the concepts of interest rate, stock price, foreign exchange, commodity price, credit, liquidity, and off-balance-sheet risks (GA4, GA5).

LO3 - measure, interpret and compare financial risks, respectively in local and global contexts (GA5, GA6)

LO4 - working collaboratively, appraise risk management applications of forwards and futures, options and swaps (GA5, GA7)

LO5 - analyse and explain the financial implications of environmental, social and governance (ESG) risk (GA5, GA8).

Graduate attributes

GA2 - recognise their responsibility to the common good, the environment and society 

GA4 - think critically and reflectively 

GA5 - demonstrate values, knowledge, skills and attitudes appropriate to the discipline and/or profession 

GA6 - solve problems in a variety of settings taking local and international perspectives into account

GA7 - work both autonomously and collaboratively 

GA8 - locate, organise, analyse, synthesise and evaluate information 

Content

Topics will include:

• risk governance, risk management framework and enterprise risk management
• concepts and sources of financial risks
• measures of interest rate, stock price, foreign exchange, commodity price, credit, liquidity, and off-balance-sheet risks
• Value at Risk and Expected Shortfall
• management of financial risks using forwards and futures, options, and swaps
• financial implications of ESG risk
• collaboration in the financial risk management context

Learning and teaching strategy and rationale

“Level 3. Focus: what the student does” instead of a “teacher-focused approach” ACU’s teaching policy focuses on learning outcomes for students. Our teaching aims to engage students as active participants in the learning process while acknowledging that all learning must involve a complex interplay of active and receptive processes, the constructing of meaning for oneself, and learning from others. ACU promotes and facilitates learning that is autonomous and self-motivated, is characterised by the individual taking satisfaction in the mastering of content and skills and is critical, looking beneath the surface level of information for the meaning and significance of what is being studied.

The schedule of the workshop is designed in such a way that students can achieve intended learning outcomes sequentially. Teaching and learning activities will apply the experiential learning model, which encourages students to apply higher order thinking. The unit ensures that learning activities involve real-world scenarios that in turn assist with ‘real-world’ preparedness. The unit also uses a scaffolding technique that builds a student’s skills and prepares them for the next phase of the learning process.

This unit is structured with required upfront preparation before workshops, most students report that they spend an average of one hour preparing before the workshop and one or more hours after the workshop practicing and revising what was covered. The online learning platforms used in this unit provide multiple forms of preparatory and practice opportunities for you to prepare and revise. It is up to individual students to ensure that the out of class study is adequate for the optimal learning outcomes and successes.

Mode of delivery: This unit is offered in different modes. These are: “Attendance” mode, “Blended” mode and “Online” mode. This unit is offered in three modes to cater to the learning needs and preferences of a range of participants and maximise effective participation for isolated and/or marginalised groups.

Attendance Mode

In a weekly attendance mode, students will require face-to-face attendance in specific physical location/s. Students will have face-to-face interactions with lecturer(s) to further their achievement of the learning outcomes. This unit is structured with required upfront preparation before workshops, most students report that they spend an average of one hour preparing before the workshop and one or more hours after the workshop practicing and revising what was covered. The online learning platforms used in this unit provide multiple forms of preparatory and practice opportunities for you to prepare and revise.

Blended Mode

In a blended mode, students will require intermittent face-to-face attendance determined by the School. Students will have face-to-face interactions with lecturer(s) to further their achievement of the learning outcomes. This unit is structured with required upfront preparation before workshops. The online learning platforms used in this unit provide multiple forms of preparatory and practice opportunities for you to prepare and revise.

Online Mode

In an Online mode, students are given the opportunity to attend facilitated synchronous online seminar classes with other students and participate in the construction and synthesis of knowledge, while developing their knowledge. Students are required to participate in a series of online interactive workshops which include activities, knowledge checks, discussion and interactive sessions. This approach allows flexibility for students and facilitates learning and participation for students with a preference for virtual learning.

Assessment strategy and rationale

Assessments are used primarily to foster learning. ACU adopts a constructivist approach to learning which seeks alignment between the fundamental purpose of each unit, the learning outcomes, teaching and learning strategy, assessment and the learning environment. In order to pass this unit, students are required to achieve an overall score of at least 50%. Using constructive alignment, the assessment tasks are designed for students to demonstrate their achievement of each learning outcome.

Assessment one and two are the same regardless of whether teaching mode is attendance, blended, or online. Assessment three is the same for attendance and blended modes, but changes for online mode. This is indicated in overview of assessment table below. Both methods assess the same learning outcomes.

Overview of assessments

Representative texts and references

Chance, DM & Brooks R 2016, Introduction to derivatives and risk management, 10th edn, Cengage Learning.

Hubbard, D.W 2020, The failure of risk management: why it’s broken and how to fix it, 2nd edn, Wiley.

Hull, J.C. 2018, Risk management and financial institutions, 5th edn, Wiley.

Población, GF.J. 2017, Financial risk management: identification, measurement and management, Springer International Publishing.