course outline risk management - Faculty of Economics and Business

COURSE OUTLINE
RISK MANAGEMENT
Course code and Session:
Credit units:
Lecturer:
Consultation
Venue:
schedule:
February - June 2008
3 units
John E. Junarsin, M.B.A.
Office: Room B-320, West-wing Building
Faculty of Economics and Business
Universitas Gadjah Mada
Yogyakarta, Indonesia 55281
Phone: +62274548510 ext. 287
+62274548510 ext. 250 (secretary)
E-mail: [email protected]
Friday, 10:00 a.m. - 12:00 p.m., or with an appointment
IUP
Risk is costly. This statement is absolutely agreed by businessmen and professionals,
particularly those facing inherent risk in their professional lives. Minimising the cost of
risk to an optimum level unanimously means that we are increasing the value of a firm.
However, the cost of risk minimisation, albeit its ease to say or leam conceptually, is
very much difficult to implement, either by self-managed method or by risk-transfer
approach. If a business executive decides to manage the cost of risk herself, she has to
estimate direct and indirect costs pertaining to the possibly risky events or occurrences.
On the other hand, if executive transfers the risk to a third party, she has to load in
insurance premium as the compensation for the insurer, comprising administrative fees
and the insurer's business retum.
Hence, risk management course is of importance to business students expecting to deal
with business and professional lives in the future. This course is designed to introduce
and discuss various risk management concepts, tools, and techniques in global context.
Using integrated approaches, the course will emphasise discussion on the design and
implementation of risk management practices. Basically, it purports to help students
reaIise, understand, and master various state-of-the-art risk management theories and
practices (such as loss control, loss financing, and intemal risk reduction mechanisms) as
well as their advancement in the future.
1. To provide students with a comprehensive perspective on risk management and
insurance concepts, tools, and techniques;
2. To develop analytical and integrative thinking in understanding
and
implementing the risk management practices;
3. To arouse the sense of business through an experiential approach, especially in
the completion of assignments;
4. To practice communication skills intertwined with risk management topics;
5. To strengthen the creativity of students, as Florida (2002), a management sage,
has labelled today's generation as "the rise of creative class".
Saunders, A. and M. Cornett. 2008. Financial institutions management: A risk management
approach, 6th ed. Boston: McGraw-Hill.
Harrington, S. and G. Niehaus. 2004. Risk management and insurance, 2nd ed. Boston:
McGraw-Hill.
Rivai, V., A. Veithzal, and F. Idroes. 2007. Bank and financial institutions management:
Conventional and Sharia System. Jakarta: Rajawali Pers.
Relevant articles and case studies acquired from journals and magazines, especially
those related to risk management concepts and practices.
Presence. Students are required to attend lectures at least 75% of total lectures held. Any
violation against this rule may cause the ineligibility to get a final grade.
Class participation.
Students are highly expected to contribute ideas, thoughts,
experiences, and arguments to the class discussion. Although overviews of key points
and issues will be provided, we strongly recommend that students comprehend the
materials in details, raise questions and ideas, and create a "lively" class, meaning that
you must read and prepare readings assigned prior to coming to the class.
An experiential approach. Continuously and consistently, students are assigned to
construct experiential observations on managerial cases and practices, and subsequently
report the findings to the instructor.
Internet exploration. Students are encouraged to harness the advancement of
information and communications technology (ICT) in exploring knowledge and
opportunities. Remember that in current competitive environment, a clever person is not
she who can answer all questions; rather, it is she who knows where to find answers.
Item
Class participation
Paper
Assignments and presentations
Mid-term examination
Final examination
Weight
20%
20%
20%
20%
20%
Due Date
The end of each lecture
The last lecture day
Presentation schedule
Paper on risk management An individual paper is to be submitted, describing your
experiences in either managing business or analysing risk management theories and
practices. The paper should be written based on the analysis of actual risk management
perspective. It is expected that the paper is readable and does not exceed 5,000 words
(English) or 7,500 words (Indonesian).
Assignments and presentations. Students will be randomly distributed into five groups.
Besides functioning as a discussion forum, the group has tasks to analyse cases and facts
assigned by the instructor, and present it before all participants. The cases may be taken
from textbooks; either can they be real cases acquired from various sources. It is
expected that in the presentation, you show business problems, their alternative
solutions, and arguments. Each assignment should be submitted in the format of a
presentation.
Late submissions will not be accepted without the prior approval of the lecturer. All
requests for extensions should be directed to John E. Junarsin bye-mail
[email protected]) at least one week before the due date for submission.
Extensions will be granted for medical reasons upon receipt of a medical certificate, or in
exceptional circumstances in consultation with the lecturer.
Examinations.
understanding
Mid-term and final tests purport to examine students' knowledge and
of concepts learnt in the lectures.
Topic
Week
2
3
4
Syllabus
Introduction to risk management
Enterprise risk management
Risk and return
Why are financial intermediaries special?
Risks of financial intermediation
5
Interest rate risk
6
Market risk
7
Credit risk
1
8
9
10
11
12
13
14
Week
1-3
4-7
Mid-term Exam
Off-balance-sheet risk
Technology and other operational risks
Foreign exchange risk
Sovereign risk
Liquidity risk
Insurance
Options, caps, floors, and collars
Swaps
Futures and forwards
Securitisation
Final Exam
Reading(s)
Bricks
Bricks
Bricks
Chapter 1
Chapter 7
Chapter 8 and
Chapter 9
Chapter 10
Chapter 11 and
Chapter 12
Chapter 13'
Chapter 14
Chapter 15
Chapter 16
Chapter 17
Bricks
Chapter 25
Chapter 26
Chapter 24
Chapter 28
Assignments
Depository institutions in Indonesia: Size, structure, composition of the
industr , balance sheet, recent trends, re
ations, and erformance
Insurance companies in Indonesia: Size, structure, composition of the industry,
balance sheet, recent trends, re
ations, and erformance
Securities firms and investment banks in Indonesia: Size, structure,
composition of the industry, balance sheet, recent trends, regulations, and
erformance
Mutual funds in Indonesia: Size, structure, composition of the industry,
balance sheet, recent trends, re lations, and erformance
Finance companies in Indonesia: Size, structure, composition of the industry,
balance sheet, recent trends, re
ations, and erformance
Interest rate risk measurement and mana ement in an Indonesian com
Market risk measurement and mana ement in an Indonesian com an
Credit risk measurement and mana ement in an Indonesian com an
Off-balance-sheet risk measurement and management in an Indonesian
com an
Technology and other operational risks measurement and management in an
Indonesian com an
Foreign exchange risk measurement and management in an Indonesian
com an
Soverei
risk measurement and mana ement in an Indonesian com an
Li uidi risk measurement and mana ement in an Indonesian com
Insurance practices in an Indonesian business
Hed in usin derivatives in an Indonesian business
Grade
B
C
D
r
%
70-79
60-69
50-59
0-49
•
•
•
•
D (50-59) means that you are able to summarise and order readings relevant to
the topic.
C (60-69) means that you do this with some greater precision and flair or more
comprehensively and/ or accessibly.
B (70-79) indicates that you have shown evidences of substantial and well argued
independence of thoughts, insightful evaluation, or original research.
A (80-100) indicates that you have added significant new values to existing
knowledge or understanding through logic or evidence of some ingenuity,
creativity, or excellence.
At the undergraduate level, a good quality presentation and content is expected. All
works should be typewritten, proofread, and checked for accuracy before submission.
Marks will be deducted for lack of referencing.
Faculty of Economics and Business, Universitas Gadjah Mada has strict rules regarding
honesty in assessment. All candidates should be aware of the rules concerning
misconducts in assessment, which prohibit certain behaviours, such as:
•
•
•
No part of the work has been copied from any other person's work except where
due acknowledgement is made in the text,
No part of the work has been written by any other person except where such
collaboration has been authorised by the lecturer concerned, and
No part of the work has been submitted for assessment in another course in this
or another part of the university except where authorised by the lecturer
concerned.
Apart from his business activity as a stock and derivatives trader, John E. Junarsin is a
faculty member of the Faculty of Economics and Business, Universitas Gadjah Mada,
Indonesia and a visiting professor of the Faculty of Business and Law, Pforzheim
University of Applied Sciences, Germany. Born in Jakarta, he spent youth time in
Pontianak. He graduated from the Faculty of Economics and Business, Universitas
Gadjah Mada (FEB UGM), and was awarded a bachelor's degree in Management as the
best graduate. He then continued studying and acquired an M.B.A. degree from
National Graduate School of Management, the Australian National University, Australia
as a first-class division (high distinction) graduate. In addition to international
experiences, he also got an exchange diploma from Hiroshima University of Economics,
Japan. Furthermore, he has previously gained some professional experiences when
joining General Electric, Charoen Pokphand Indonesia, and Canberra Culinary Centre.
Other awards won include: (1) Chancellor's Letter of Commendation for Outstanding
Academic Performance, the Australian National University; (2) Management Services
AG Prize in International Business Strategy; (3) Pauline Griffin Prize in Managing
People and Organisations; (4) Australian Development Scholarship; (5) Best group and
discussion leader award, Consulting Skills Training, Dusit Mangga Dua Hotel, Jakarta,
Indonesia; and (6) Association of International Education, Japan (AIEJ) Scholarship.
Currently, he is appointed to be the Director of Center for Business and Economic
Database of FEB UGM and the Deputy Director of Risk Management Professional
Education of FEB UGM. He previously served as the Director of Language Training
Centre of FEB UGM.