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Risk in Financial Services

Module description

This module is intended for Investment Operations Specialist Degree Apprenticeship students who would like an introduction to the principle of risk management and international risk regulation. The module introduces the specific risks that face a financial services firm and provides an overview on the practice of using processes, method and tools for quantifying and managing these risks and uncertainties. The key elements of risk management and the differences between risk and uncertainly will be discussed in the module.

Module aims - intentions of the module

This module aims to provide students with a broad understanding on the principles of risk management under the current economic environment. The module also introduces a background to the key sources of internal and external risks and their potential impact on a business. You will be able to identify the key elements of risk management and the differences between risk and uncertainty.

This module shows how key internal and external drivers of risk can be typically assessed to support an organisation’s management in risk culture and control. The overall aim is to introduce an overview of risk concepts and understand how risk management protects and add value to organisation and its stakeholders.

Intended Learning Outcomes (ILOs)

ILO: Module-specific skills

On successfully completing the module you will be able to...

• 1. Discuss the processes typically used to identify, reduce and manage specific aspects of risk
• 2. Analyse the key elements of risk management and the differences between risk and uncertainty
• 3. Discuss the key aims of the operational risk management function
• 4. Identify the main areas of exposure of counterparty, systematic and issuer risk within banking, securities and investment functions
• 5. Evaluate the merits and limitations of using credit ratings to assess credit-worthiness of companies and financial instruments
• 6. Establish the role and sound practice features of an effective market risk management function
• 7. Describe the main investment risks and their implications for investors and investment selection
• 8. Explain the constituents of liquidity risk and how they can arise within the contexts of credit, market, investment and operational risk
• 9. Discuss the structural framework and high-level process of key business functions in relation to risk identification and management
• 10. Explain how enterprise risk relates to the process of corporate governance and board responsibilities

ILO: Discipline-specific skills

On successfully completing the module you will be able to...

• 11. Identify the key challenges of implementing risk governance structure, policies and procedures
• 12. Identify how appropriate management of risk factors can add value and reduce risk
• 13. With guidance identify, synthesise, analyse and present appropriate information to assist management with risk management in decision making process

ILO: Personal and key skills

On successfully completing the module you will be able to...

• 14. Apply professional communication skills in dealing with complex situations and issues
• 15. Apply effective negotiation and problem-solving skills

Syllabus plan

• Principles of Risk Management
• International Risk Regulation
• Operational Risk
• Credit Risk
• Market Risk
• Investment Risk
• Liquidity Risk
• Model Risk
• Risk Oversight and Corporate Governance
• Enterprise Risk Management (ERM)

Learning activities and teaching methods (given in hours of study time)

Details of learning activities and teaching methods

Formative assessment

Summative assessment (% of credit)

Details of summative assessment

Details of re-assessment (where required by referral or deferral)

Re-assessment notes

Deferral – if you have been deferred for any assessment you will be expected to submit the relevant assessment. The mark given for a re-assessment taken as a result of deferral will not be capped and will be treated as it would be if it were your first attempt at the assessment.

Referral – if you have failed the module overall (i.e. a final overall module mark of less than 40%) you will be expected to submit the relevant assessment. The mark given for a re-assessment taken as a result of referral will be capped at 40%

Indicative learning resources - Basic reading

• Risk in Financial Services (Investment Operations Certificate) Workbook Ed (most recent), the Chartered Institute for Securities and Investment.

• Saunders and Cornett (2018), Financial Institutions Management: A Risk Management Approach, 9^th Edition, McGraw-Hill.

• Revision Express, CISI online, the Chartered Institute for Securities and Investment

Indicative learning resources - Web based and electronic resources

Revision Express (CISI), online materials on ELE

Key words search

Risks, Financial Services