BAFN609 - Risk Management and Insurance

Year

Credit points

Campus offering

Prerequisites

Teaching organisation

Unit rationale, description and aim

This unit introduces the student to the different types of risks faced by corporations and frameworks for assessing and mitigating those risks. Students will learn to understand the concepts of risk measurement and evaluation, risk management in the board room, enterprise risk management, risk exposures and mitigation, insurance markets, insurance industry regulation and taxation and Value at Risk (VaR). Students will develop skills in identifying and managing risks. Students will be able to apply derivatives to generate the risk mitigating plans of firms. This unit provides students 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 - understand the features of the risk management process, risk governance, risk reduction and an enterprise risk management (GA2, GA3, GA4, GA5, GA6, GA8, GA10) 

LO2 - apply Value at Risk (VaR) in measuring overall and individual position market risk (GA3, GA4, GA5, GA8) 

LO3 - apply forward and future contracts in managing risks (GA4, GA5, GA6, GA8) 

LO4 - apply swaps and options contracts in managing risk (GA4, GA5, GA7, GA8, GA9, GA10) 

LO5 - evaluate the structure of the insurance market and insurance based solutions to risk management problems (GA4, GA5, GA7, GA8, GA9, GA10) 

LO6 - Generate risk mitigating plans for a firm collaboratively (GA4, GA5, GA7, GA8, GA9, GA10). 

Graduate attributes

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

GA3 - apply ethical perspectives in informed decision making

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 

GA9 - demonstrate effective communication in oral and written English language and visual media 

GA10 - utilise information and communication and other relevant technologies effectively.

Content

Topics will include: 

Introduction to risk and the objectives of risk management;  

• Risk Management 
• Risk Governance 
• Market Risk 
• Credit Risk 
• Operational Risk  
• Liquidity Risk 
• Interest Rate Risk 
• Exchange Rate Risk 
• Value at Risk 
• Forward and futures contracts 
• Swap and options contracts 
• Insurance Markets 
• Insurance Industry Regulation and taxation 
• Insurance products, services and processes 

Learning and teaching strategy and rationale

The teaching and learning strategy is built on a “student-focused approach,” which can be described as “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 taught in a flipped classroom format and 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. It is up to individual students to ensure that the out of class study is adequate for the optimal learning outcomes and successes. 

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, you are required to achieve an overall score of at least 50%. Using constructive alignment, the assessment tasks are designed for you to demonstrate your achievement of each learning outcome.  

Overview of assessments

Representative texts and references

Población García, F. (2017). Financial Risk Management Identification, Measurement and Management., Palgrave Macmillan. (ISBN: 978-3-319-41365-5). 

Lange, H.,Saunders, A & Cornett, MM 2015, Financial institutions management: a risk management approach, 4th edn, North Ryde, NSW. McGraw-Hill.