I. Course Description: Risk Management and Capital Adequacy
In the past risk management was divided in to 2 main focuses: Risk Financing, the transfer of risk to a third party
by the purchase of insurance; and Risk Control, the emphasis of preventative measures to make the occurrence of
loss less likely.
Today the environment of risk is changing. The globalization of business activity has altered the dynamics of risk
facing today's company. New and innovative sources of risk capital must be offered to meet this challenge.
Financial institutions and large reinsurance companies have seen this need and are active in the development of
products to address them. Products such as insurance linked securities, multi-trigger products, and contingent
capital have begun their journey toward acceptance in this new environment.
This course will explore the promise offered by these truly unique products for the efficient use of capital resources
in the management of risk. The textbook for this course has been written by a pioneer in the field. The book is
relatively short and offers clear explanations and illustrations to convey the concepts.
II. Course Objective
At the conclusion of this course the student should be comfortable with the following concepts:
The conventional approach to risk management
Integrating risk management and capital management
Weekly assignments = 20%
Mid Term Exam (Chapters 1-7) = 40%
Final Exam - Non cumulative (Chapters 7-14) = 40%
A = 100 - 90%
B = 89 - 80%
C = 79 - 70%
D = 69 - 60%
F = 59% - below
Assignments must be completed on a weekly basis. Please submit weekly assignments via email by Sunday evening
of each week. Late assignments will affect your grade.
The course study should take 8 weeks to complete, but must be completed within 12 weeks of an agreed starting
date.
The instructor may be contacted by e-mail with any questions or concerns. If person to person conversation is
necessary, the student should e-mail the instructor with a time and phone number where the student can be
reached.
Academic honesty is highly valued at Canyon College. A student must present the product of his or her own
original work.
V. Weekly Course Outline and Assignments
Weekly assignments will be given to the student prior to starting the course. Most assignments will consist of short
answer questions which will relate to the text, personal experience, and timely issues. The chapter coverage timing
is listed below. This is the optimal course time frame that works well to keep the student motivated toward
completion. However, I do realize that you have chosen Canyon College because you have active professional and
social lives outside of school. Exceptions to the optimal time frame must be discussed with the instructor and will be
considered on a case by case basis.
The answers to the assignments should of sufficient length and content to clearly demonstrate your
understanding of the subject.
Week 1
Chapters 1, 2, and 3: Everyone is a Risk Manager, The Conventional Approach to Risk Management, and
Integrating Risk Management and Capital Markets
Week 2
Chapters 4 and 5: Risk Mapping, Converging Markets and Capital Management
Week 3
Chapters 6 and 7: Multi-Line and Multi-Trigger Products, Finite Risk Management
Week 4
Review and MIDTERM EXAM
Week 5
Chapters 8 and 9: Run-Off Solutions, Contingent Capital
Week 6
Chapters 10 and 11: Insurance-Linked Securities, Weather Risk Management
Week 7
Chapters 12, 13, and 14: Global Outlook, Prospects and Challenges, Migrating to the New Environment
