FIN204 Fundamentals of Risk

Examines the fundamentals of risk, focusing on:

  • The unique characteristics of each type of risk and their causes, measurement, monitoring and management in different types of Financial Services (banking, insurance(both life and general), superannuation, managed investments and hedge funds) in both Australian and international contexts
  • Using the study of individual types of risk to identify the fundamentals or risk, i.e. the common characteristics and interconnectedness of different types of risk
  • Evaluation of the different methodologies for measuring, monitoring and managing different types of risk
  • The common features across different types of risk for measurement and management (such as stress testing)
  • The difference between regulatory requirements and commercial imperatives in managing different types of risk
  • The use of risk management tools in business practices such as business selection, pricing and performance management
  • The difference between simple and very practical procedures for risk measurement and management and more valid, but more complex, procedures
  • The need for the deep embedding of risk management in the procedures, culture and governance of a financial services enterprise
  • The relationship between the management of individual risks and overall enterprise risk management and overall business management.

This subject contributes to the financial risk management (compulsory subject) and corporate finance majors.

For more information, please refer to the subject outline.

  • Learning outcomes
    • At the completion of this subject students should be able to:

      1. Analyse the management of different types of risk in a financial institution and their integration into business management and governance
      2. Analyse asset and liability management and its integration into business management and governance.
      3. Analyse the management of economic and regulatory capital and their integration into business management and governance
      4. Analyse the management of funds transfer pricing and its integration into business management and governance
      5. Analyse the integration of the management of different types of individual risks into enterprise risk management.
  • Subject content
    • Topic Title
      Topic 1 Introduction to risk and its management
      Topic 2 Legal/regulatory and reputational risk
      Topic 3 Interest rate risk
      Topic 4 Funding and liquidity risk
      Topic 5 Managing margins and spreads
      Topic 6 Enterprise risk management
      Topic 7 Asset and liability management
      Topic 8 Funds transfer pricing
      Topic 9 Economic and regulatory capital

  • Assessment
  • Prerequisites
    • There are no pre-requisites for this subject.

  • Course transition subject equivalence
    • Students who transition from a SIA/Finisia/Kaplan course and have completed the following subject within the course completion time frame may not also complete this subject:

      • FIN114 Risk Management for Finance Sector Enterprises
  • Reading list
    • There are no prescribed texts for this subject.

      Details of any required and further readings for this subject are provided in the subject room.  Purchase of any text other than a prescribed text is not required.