BUS4077 develops a systematic approach to identifying, measuring, and managing risk in both personal and business contexts. Building on BUS4070 (Foundations in Finance), students examine financial risk management frameworks, explore personal risk strategies applicable to individual financial planning, and study the insurance and alternative instruments available for transferring or mitigating business risks. The course develops risk management literacy applicable across corporate finance, financial planning, and general management roles.
Risk identification, measurement, and management
Core topics
- Financial risk management: The risk management process — risk identification, quantification (probability × impact), response strategies (avoid, reduce, transfer, accept), and monitoring — applied to financial risk categories including market risk, credit risk, liquidity risk, and operational risk
- Personal risk strategies: Risk management principles applied to individual and family financial planning — life insurance, disability insurance, health coverage, property and liability protection, and how personal risk management integrates with overall financial planning goals
- Business risk management: Enterprise risk management (ERM) frameworks, property and casualty risk, business interruption risk, liability exposure, directors and officers (D&O) liability, and how organizations structure comprehensive risk management programs
- Insurance: The economics of insurance — how risk pooling works, insurance contract structure, underwriting, premium determination, and how businesses and individuals use commercial insurance lines to transfer risk to insurers
- Alternative risk tools and techniques: Financial derivatives (options, futures, swaps) as hedging instruments, captive insurance, self-insurance programs, risk retention groups, and other alternatives to traditional commercial insurance for managing business risk
- Derivatives for risk management: Practical application of options and futures contracts for hedging commodity price risk, interest rate risk, and foreign exchange risk in business operations
BUS4077 assignments include risk assessments, insurance program analyses, and hedging strategy papers
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Frequently asked questions
Traditional risk management typically addressed risks in silos — a separate insurance program for property, a treasury function managing FX exposure, an IT department managing cyber risk. Enterprise Risk Management, formalized in the COSO ERM framework (2004, updated 2017), takes a holistic view: identifying all significant risks to the organization's strategic objectives, prioritizing them consistently using a common risk framework, and ensuring the board and senior management have visibility into the full risk portfolio. ERM recognizes that risks interact — a supply chain disruption may simultaneously create operational risk, reputational risk, and financial risk — and that the organization's risk appetite should be set at the strategic level and cascaded through every operational decision. BUS4077 introduces students to both the theoretical framework of ERM and the practical tools — insurance, derivatives, operational controls — used to manage specific risk categories within that framework.