Unit rationale, description and aim
The purpose of this unit is to introduce students to the fundamental business function of financial risk management. It is designed to equip students with a foundational understanding of financial risk management and the strategic tools available, especially derivative market instruments, to mitigate these risks. In this unit, students will gain the ability to assess various financial risk exposures, such as market, credit, liquidity, and operational risks.
The unit delves into the mechanics of derivatives markets, including forwards, futures, options, and swaps, and their critical role in mitigating exposures to financial risks. By exploring practical hedging strategies, students will learn to develop appropriate solutions for managing spot, interest rate, and credit risks effectively.
The unit’s holistic approach integrates theoretical frameworks with real-world applications, fostering the ability to formulate well-informed, ethical, and effective financial risk management strategies. In doing so, students apply both principles of prudence and stewardship in managing uncertainties in achieving business objectives. Ultimately, this unit aims to prepare students for the complexities of the financial system and derivatives market, empowering them to make sound decisions to mitigate the financial risks that arise in the business world.
Campus offering
No unit offerings are currently available for this unit.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.
Assess the various financial risks to which a busi...
Learning Outcome 01
Evaluate the various types of derivative instrumen...
Learning Outcome 02
Formulate hedging strategies to reduce or eliminat...
Learning Outcome 03
Work collaboratively to analyse and propose soluti...
Learning Outcome 04
Critically reflect upon the ethical use of derivat...
Learning Outcome 05
Content
Topics will include:
- The financial risk management process
- Identifying and evaluating financial risks
- Financial markets, products, participants and derivatives
- Forwards and futures
- Options
- Swaps
- Hedging spot risk
- Hedging interest rate risk with forwards, futures and options
- Hedging interest rate risk with swaps
- Hedging credit risk
- Managing other financial risks – liquidity risk, derivatives exposures and operational risk
- Ethics in derivatives markets
Assessment strategy and rationale
Owing to the practical nature of the subject, the assessment strategy of the subject will be highly geared towards real-world examples and case studies as the basis for assessment tasks. As a third-year subject, the assessments will also look to incorporate the various work-ready skills students have learnt over the course of their studies, including communication and other soft skills, use of various forms of media in presenting information and recommendations, and critical thinking skills for problem-solving. Assessments will, thus, include both written and video presentations, along with individual and group tasks, which will provide students with the opportunity to demonstrate the practical skills embodied in the unit’s learning objectives.
Overview of assessments
Assessment Task 1: Report Written assignment th...
Assessment Task 1: Report
Written assignment that requires students to explore the derivatives market and products
Submission Type: Individual
30%
Assessment Task 2: Case Study Video present...
Assessment Task 2: Case Study
Video presentation assignment that requires students to work together in developing appropriate strategies to manage financial risks based on a real-world case study
Submission Type: Group
35%
Assessment Task 3: Report Final report that requ...
Assessment Task 3: Report
Final report that requires students to critically assess financial risk management and hedging decisions from a key stakeholder and stewardship perspective.
Submission Type: Individual
35%
Learning and teaching strategy and rationale
Students should anticipate undertaking 150 hours of study for this unit over a twelve-week semester or equivalent study period, including class attendance, readings, online forum participation and assessment preparation.
This unit may be offered in “Attendance” and/or “Online” mode to cater for the learning needs and preferences of a range of participants.
Attendance Mode
Students will require face-to-face attendance in blocks of time determined by the school. 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. The online learning platforms used in this unit provide multiple forms of preparatory and practice opportunities for students to prepare and revise.
Online Mode
This unit utilises an active learning approach whereby students will engage in e-module activities, readings and reflections, and opportunities to collaborate with peers in an online environment. This can involve, but is not limited to, online workshops, online discussion forums, chat rooms, guided reading, and webinars. Pre-recorded lectures will be incorporated within the online learning environment and e-modules. In addition, electronic readings will be provided to guide students’ reading and extend other aspects of online learning.