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Risk Management

Purpose of Course  showclose

The Business Administration major is designed to prepare you for a leadership role in today’s highly competitive, global business environment.  This elective course will allow you to incorporate risk management principles into your individual management style.  Risk management refers to the process of identifying, assessing, and prioritizing risks.  This course will teach you how to accurately assess the consequences of uncertain events; the ultimate goal for risk managers is to reduce and control the likelihood of such occurrences.  Personal attitudes toward risk vary widely (for example, attitudes can range from risk-averse to risk-seeking).  You are advised to approach this course from the perspective of a business manager (i.e., as a decision maker).

Unforeseen circumstances can occur in various contexts, including natural disaster, collapses in financial markets, and accidents.  As a business manager, you will need to use risk management tools to minimize and control the probability and impact of unfortunate events.  Global events from the past few years provide ample evidence of the challenges associated with managing risk.

In this course, you will engage with case studies that address the catastrophes of the first decade of the new millennium, including the credit crisis of 2008–2009.  These cases illustrate the importance of risk management and demonstrate how missed opportunities in effective risk management can and have led to monumental negative consequences.  You will learn how and why risk management is a primary strategy for sustainability and success in our uncertain and complex world.

Course Information  showclose

Welcome to BUS404: Risk Management.  Below, please find general information on this course and its requirements. 
 
Course Designers: Rick Gibson, Ph.D. and Ha Nguyen, Ph.D., MBA
 
Primary Resources: This course is composed of a variety of free, online materials.  However, the course makes primary use of:
  • MIT Open Courseware: Professor John Parsons’ Practice of Finance: Advanced Corporate Risk Management: Course Notes
Requirements for Completion: In order to complete this course, you will need to work through each unit and all of the assigned materials.  The “Risk Management Reference Sheet” provided in Unit 1, along with the templates and checklists provided throughout the course, will come in handy as you apply the concepts introduced in each unit.  It may serve you well to print or download these items for quick reference.  You will also need to complete:
  • Unit 1 Assessment
  • Unit 3 Assessment
  • Unit 4 Assessment
  • Unit 5 Assessment
  • Unit 5 Activity
  • Unit 6 Assessment
  • The Final Exam 
Note that you will only receive an official grade on your Final Exam.  However, in order to adequately prepare for this exam, you will need to work through all of the resources in the course as well as the assessments and activity listed above.
 
In order to “pass” this course, you will need to earn a 70% or higher on the Final Exam.  Your score on the exam will be tabulated as soon as you complete it.  If you do not pass the exam, you may take it again.
 
Time Commitment: This course should take you a total of 74.5 hours to complete.  Each unit includes a “time advisory” that lists the amount of time you are expected to spend on each subunit.  These should help you plan your time accordingly.  It may be useful to take a look at these time advisories and to determine how much time you have over the next few weeks to complete each unit, and then to set goals for yourself.  For example, the readings for Unit 1 should take 5 hours to complete.  Perhaps you can sit down with your calendar and decide to complete subunits 1.1 through 1.3 (a total of 3 hours) on Monday night; subunits 1.4 and 1.5 (a total of 2 hours) on Tuesday night; etc.
 
Tips/Suggestions: If you are taking this elective, ideally you will have completed all of the courses in the Core Program of the Business Major, which consists of a selection of courses that focus on cross-functional business competencies but do not cover risk management.

The companion textbook, Risk Management for Enterprises and Individuals, uses “links” in each chapter to tie each concept and objective in the chapter to the realm of global or holistic management of risk.  The solutions to risk problems require a compilation of techniques and perspectives, often fitting together like puzzle pieces.  Each chapter begins with a connection section to show relationships between personal risk and holistic enterprise risk.
 
Please take comprehensive notes as you work through each resource.  These notes will serve as a useful review as you study for your Final Exam.

Learning Outcomes  showclose

Upon successful completion of this course, the student will be able to:
  • Identify and discuss various types of risks.
  • Define risk as a consequence of uncertainty and within a continuum of decision-making roles.
  • Perform quantitative risk analysis using risk measurement techniques to assess the severity and consequences of a given risk as well as its overall threat.
  • Identify the most common risk management mistakes by considering how Utility Theory impacts attitudes toward risk.
  • Explain and use techniques to manage risk in a holistic, global, and integrated manner.
  • Use tools such as predictive analytics, modeling, and simulation to improve risk management.

Course Requirements  showclose

In order to take this course, you must:

√    Have access to a computer.

√    Have continuous broadband Internet access.

√    Have the ability/permission to install plug-ins or software (e.g. Adobe Reader).

√    Have the ability to download and save files and documents to a computer.

√    Have the ability to open Microsoft files and documents (.doc, .ppt, .xls, etc.).

√    Have competency in the English language.

√    Have read the Saylor Student Handbook.

√   Have completed the following courses from “The Core Program” of the Business major: BUS204 and BUS208.  Completion of the following elective courses are recommended but not required: BUS300 and BUS303.

Unit Outline show close


Expand All Resources Collapse All Resources
  • Unit 1: The Nature of Risk: Losses and Opportunities  

    Risk management has become a focal point in business practices and societal decision-making in the twenty-first century.  The focus on risk management has become particularly important with the recent crisis of the global financial systems that arose with the failures in predicting, preventing, and containing risk.  As a focused field of study, risk management draws on core knowledge from law, engineering, finance, economics, medicine, psychology, accounting, mathematics, statistics, and other fields to create a holistic and sustainable decision-making framework.  This unit introduces the fundamentals of risk management, including the definition of risk and roles of risk in decision-making.  You will also learn to distinguish between different classifications of risks and attitudes toward risk.

    Unit 1 Time Advisory   show close
    Unit 1 Learning Outcomes   show close
  • 1.1 The Notion and Definition of Risk  
  • 1.1.1 Risk as a Consequence of Uncertainty  

    Note: This topic is covered by the reading assigned below subunit 1.1.  In particular, focus on the text below the heading “Risk as a Consequence of Uncertainty.”

  • 1.1.2 The Role of Risk in Decision Making  

    Note: This topic is covered by the reading assigned below subunit 1.1.   In particular, focus on the text below the heading “The Role of Risk in Decision-Making” as well as review Figure 1.3.

  • 1.1.3 Definitions of Risk  

    Note: This topic is covered by the reading assigned beneath subunit 1.1.  Focus on the text below the heading “Definition of Risk.”

  • 1.2 Attitudes Toward Risk  
  • 1.3 Types of Risks  
  • 1.3.1 Pure versus Speculative Risk Exposures  

    Note: This subunit is covered by the reading assigned beneath subunit 1.3.  Focus on the section titled “Pure Versus Speculative Exposures.”  Also, pay attention to Table 1.2, which provides examples of pure risks and speculative risks.

  • 1.3.2 Diversifiable and Nondiversifiable Risks  

    Note: This subunit is covered by the reading assigned beneath subunit 1.3.  Focus on the section titled “Diversifiable and Non-Diversifiable Risks.”

  • 1.3.3 Enterprise Risks  

    Note: This subunit is covered by the reading assigned beneath subunit 1.3.  Focus on the section titled “Enterprise Risks.”  Study Figure 1.6, and make sure you understand the concepts addressed in this figure before moving on to the next subunit.

  • 1.4 Where We Have Been – Key Takeaways  
  • Unit 1 Assessments  
  • Unit 2: Risk Measurement and Metrics  

    The previous unit explained how risk arises as a consequence of uncertainty and proposed that risk and uncertainty are connected but distinct concepts.  This unit will discuss methods of measuring risk and uncertainty.  In order to understand and use the concepts of risk and uncertainty, you need to be able to measure outcomes.  All too often, assessments of risk are mere guesses, and the consequences can range from lost opportunities to death.

    This unit will discuss measurable and quantifiable outcomes as well as how you can measure risk and uncertainty using numerical methods.

    Unit 2 Time Advisory   show close
    Unit 2 Learning Outcomes   show close
  • 2.1 Quantification of Uncertainty via Probability Models  
    • Reading: Risk Management for Enterprises and Individuals: “Chapter 2: Risk Measurement and Metrics:” “Section 2.1: Quantification of Uncertainty via Probability Models”

      Link: Risk Management for Enterprises and Individuals: “Chapter 2: Risk Measurement and Metrics:” “Section 2.1: Quantification of Uncertainty via Probability Models” (HTML)
       
      Instructions: Please click on the link above, and read Section 2.1 in its entirety to learn how to use probability models.  Remember to complete the Discussion questions at the end of the reading.  Make sure that you understand the example illustrated in Table 2.3 before continuing on to the next resource.  Please note that this reading also covers the information outlined in sub-subunits 2.1.1 through 2.1.4.
       
      Reading, note-taking, and answering the Discussion questions should take approximately 2 hours to complete.

      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above. 

    • Assessment: Actuarial Science at Illinois State University: The Society of Actuaries and the Casualty Actuarial Society’s “Practice Exercises for Course P Examination”

      Link: Actuarial Science at Illinois State University: The Society of Actuaries and the Casualty Actuarial Society’s “Practice Exercises for Course P Examination” (PDF)
       
      Instructions: In this assessment, you will be asked to answer several questions on an actuarial exam.  An actuary uses mathematics to quantify and to predict the financial impact of risk and uncertainty.  In order to become an actuary, a person has to complete successfully a series of professional level exams.  The practice exam that you will work is the basic exam, dealing with probability.  To prepare for this assessment, you may want to refresh what you have learned from your Probability and Statistics courses.
       
      To access the practice exam, click on the link above.  Under the section titled Course P Examination: (Probability) click on the link “Practice Exercises for Course P Examination” to download the PDF file.  This is a sample exam for Exam P of Society of Actuaries.  The questions are on pages 1-82.  For this course, please answer questions 6, 14, 29, 32, 33, 36, 48, 53, 64, and 99.  After you complete this exam, check your answers against the solutions. You will notice that after the final question on page 82 the solutions are listed and the page numbers restart from 1-54.
       
      This assignment will take you approximately 2 hours to complete.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 2.1.1 Quantifying Uncertain Events  

    Note: This topic is covered by the reading assigned below subunit 2.1.  Focus on the text below the heading “Measurement Techniques for Frequency, Severity, and Probability Distribution Measures for Quantifying Uncertain Events.”

  • 2.1.2 Measures of Outcome Value: Severity of Loss and Value of Gain  

    Note: This topic is covered by the reading assigned below subunit 2.1.   Focus on the text below the heading “Measures of Outcome Value: Severity of Loss and Value of Gain.”

  • 2.1.3 Probability and Outcome Value: Assessment of an Uncertain Endeavor  

    Note: This topic is covered by the reading assigned below subunit 2.1.  Focus on the text below the heading “Combining Probability and Outcome Value Together to Get an Overall Assessment of the Impact of an Uncertain Endeavor.”  Make sure that you understand the concept of “expected value,” which is critical in assessing the impact of an uncertain endeavor.

  • 2.2 Measures of Risk: Putting It Together  
  • 2.2.1 Some Common Measures of Risk: Range and Deviation  

    Note: This topic is covered by the reading assigned below subunit 2.2.  Focus on the text below the heading “Some Common Measures of Risk: Range and Deviation.”

  • 2.2.2 Financial Measures: Value at Risk (VaR) and Maximum Probable Annual Loss (MPAL)  

    Note: This topic is covered by the reading assigned below subunit 2.2.   Focus on the text below the heading “Financial Measures: Value at Risk (VaR) and Maximum Probable Annual Loss (MPAL).”

    • Reading: McKinsey & Company’s Working Papers on Risk, Number 32: Mehta et al.’s “Managing Market Risk: Today and Tomorrow”

      Link: McKinsey & Company's Working Papers on Risk, Number 32: Mehta et al.'s "Managing Market Risk: Today and Tomorrow"

      Instructions: Please click on the link above to view a collection of McKinsey's latest topics on risk management. Then, select the article's title, "Managing Market Risk: Today and Tomorrow," to download the PDF file. Read the entire article. Value at Risk (VaR) has been the cornerstone of risk management at financial institutions for decades. This reading provides an in-depth discussion of the limitations of VaR and how these limitations are addressed in real time.

      Studying this reading should take approximately 2 hours to complete.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 2.2.3 CAPM’s Beta Measure of Nondiversifiable Portfolio Risk  

    Note: This topic is covered by the reading assigned below subunit 2.2.  Focus on the text below the heading “Capital Asset Pricing Model.”

  • Subunit 2.2 Assessment  
  • Unit 3: Risk Attitudes and Expected Utility Theory  

    The previous unit introduced the most commonly used ways in which we measure risk and uncertainty.  It is important to understand that these measures are usually misunderstood, misused and misapplied.  Whenever we look into risks, risk measures, and risk management, we must always view these in a greater context. In this unit, we focus on the risk within the “satisfaction” value maximization for individual and firms. The value here is measured by economists by comparing levels of satisfaction an individual achieves when confronted with two or more choices.

    Unit 3 Time Advisory   show close
    Unit 3 Learning Outcomes   show close
  • 3.1 Utility Theory  
  • 3.2 Uncertainty, Expected Value, and Fair Games  
  • 3.3 Choice under Uncertainty: Expected Utility Theory  
  • 3.4 Biases Affecting Choice under Uncertainty  
  • 3.4.1 Framing Effect  

    Note: This topic is covered by the reading assigned below subunit 3.4.  Focus on the text below the heading “Framing Effect.”

  • 3.4.2 Availability, Experience, and Anchoring bias  

    Note: This topic is covered by the reading assigned below subunit 3.4.  Focus on the text below the heading “Availability, Experience, and Anchoring Bias.”

  • 3.5 Risk Aversion and Price of Hedging  
  • Unit 3 Assessments  
  • Unit 4: Risk Management: Fundamental Tools  

    In the prior units, we discussed risks at length from a variety of angles. With this unit, we finally begin the discussion of risk management methods.  The first step to understanding risk management is to learn the basics of the fundamental risk management processes.  In a broad sense, these include the processes of identifying, assessing, measuring, and evaluating alternative ways to mitigate risks.

    Fortunately, the importance of this topic (considered by some as THE most important) has resulted in the development of several risk management standards from highly respected organizations such as the Project Management Institute, the National Institute of Science and Technology, actuarial societies, and ISO.

    Unit 4 Time Advisory   show close
    Unit 4 Learning Outcomes   show close
  • 4.1 The Risk Management Function and Process  
  • 4.2 Beginning Steps: Communication and Identification  
  • 4.2.1 Identifying Risks  

    Note: This topic is covered by the reading assigned below subunit 4.2.  Focus on the text below the heading “Identifying Risks.”

  • 4.2.2 Risk Profiling  

    Note: This topic is covered by the reading assigned below subunit 4.2.  Focus on the text below the heading “Risk Profiling.”

  • 4.2.3 Risk Mapping: Creating the Model  

    Note: This topic is covered by the reading assigned below subunit 4.2.  Focus on the text below the heading “Risk Mapping: Creating the Model.”

  • 4.2.4 Risk Identification and Estimates of Frequency and Severity  

    Note: This topic is covered by the reading assigned below subunit 4.2.  Focus on the text below the heading “Risk Identification and Estimates of Frequency and Severity.”

  • 4.2.5 Plotting the Risk Map  

    Note: This topic is covered by the reading assigned below subunit 4.2.  Focus on the text below the heading “Plotting the Risk Map.”

  • 4.3 Projected Frequency and Severity and Cost-Benefit Analysis—Capital Budgeting  
    • Reading: Risk Management for Enterprises and Individuals: “Chapter 4: Evolving Risk Management: Fundamental Tools:” “Section 4.3: Projected Frequency and Severity and Cost-Benefit Analysis—Capital Budgeting”

      Link: Risk Management for Enterprises and Individuals: “Chapter 4: Evolving Risk Management: Fundamental Tools:” “Section 4.3: Projected Frequency and Severity and Cost-Benefit Analysis—Capital Budgeting” (HTML)
       
      Instructions: Please click on the link above, and read Section 4.3 in its entirety for an introduction to the basic tools for risk-based capital budgeting, including cost-benefit analysis as well as projected frequency and severity.  You will also learn about the Risk Management Information System (RMIS), used to quantify the loss history of an organization and assist risk managers in conducting trend analyses.  Remember to complete the discussion questions at the end of the reading. 
       
      Reading, note-taking, and answering the discussion questions should take approximately 2 hours to complete.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

    • Assignment: Murray State University: Dr. Larry Guin’s “Capital Budgeting Techniques,” “Managing Risk of the Cash Flow Estimates,” and “The Hurdle Rate”

      Link: Murray State University: Dr. Larry Guin’s “Capital Budgeting Techniques” (HTML), “Managing Risk of the Cash Flow Estimates” (HTML), and “The Hurdle Rate” (HTML)
       
      Instructions: For this activity, you will be asked to perform several capital budgeting analyses.  To prepare for the assignment, click on the first link above, and read the entire webpage for an overview of capital budgeting techniques.  Then, click on the second link above, and read the entire webpage on “Managing Risk of the Cash Flow Estimates.”  Optionally, you may also decide to read the webpage about “hurdle rate.”
       
      After reviewing all of the resources linked above, revisit the first resource, the “Capital Budgeting Techniques” webpage.  Under the section “A Capital Budgeting Spreadsheet,” make sure to click on the link to download the Excel file, “Capital Budgeting.xls.”  Scroll down to the section titled “Some Sample Capital Budgeting Problems,” and click on the “Shenandoah” link to download the PDF file.  Read the problem statement on the first page of the PDF file.  Answer the questions using the “Capital Budgeting.xls” spreadsheet that you also downloaded.  After you finish, check your answers against the solutions on pages 2-5 of the PDF file.
       
      Return to the “Capital Budgeting Techniques” webpage.  Scroll down to the section titled “Some Sample Capital Budgeting Problems,” and click on “Seal-A-Deal” to download the PDF file.  Read the problem statement on the first page of the PDF file.  Answer the questions using the “Capital Budgeting.xls” that you previously downloaded.  After you finish, check your answers against the solutions on pages 2-5 of the PDF file.
       
      Return to the “Capital Budgeting Techniques” webpage.  Scroll down to the section titled “Some Sample Capital Budgeting Problems,” and click on the “Princess Cruise Lines” link to download the PDF file.  Read the problem statement on the first page of the PDF file.  Answer the questions using the “Capital Budgeting.xls” that you previously downloaded.  After you finish, check your answers against the solutions on pages 2-6 of the PDF file.
       
      This assignment will take you approximately 4 hours to complete.
       
      Terms of Use: Please respect the copyright and terms of use on the webpages displayed above.

  • 4.4 Risk Management Alternatives: The Risk Management Matrix  
    • Reading: Risk Management for Enterprises and Individuals: “Chapter 4: Evolving Risk Management: Fundamental Tools:” “Section 4.4: Risk Management Alternatives: The Risk Management Matrix”

      Link: Risk Management for Enterprises and Individuals:“Chapter 4: Evolving Risk Management: Fundamental Tools:” “Section 4.4: Risk Management Alternatives: The Risk Management Matrix” (HTML)
       
      Instructions: Please click on the link above, and read Section 4.4 in its entirety to learn about the risk management matrix, which classifies risks based on high and low levels of frequency and severity.  The risk management matrix is a tool frequently used by risk managers in order to identify appropriate management strategies for certain types of risks.  Note that managers should try to avoid high-frequency, high-severity situations.  Remember to complete the Discussion questions at the end of the reading. 
       
      Reading, note-taking, and answering the Discussion questions should take approximately 2 hours to complete.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

    • Assignment: Mitre’s “Risk Management Toolkit”

      Link: Mitre’s “Risk Management Toolkit” (HTML)

      Instructions: Please click on the link above, scroll down to the bottom of the webpage, and select the link to download "Risk Matrix 2.20 Software"to your computer.  This is an Excel add-in that allows you to identify, prioritize, and manage risks.  You will need to have Excel installed on your computer and enable macros.  Also, click on the link on the webpage to download the PDF file titled "Risk Matrix 2.20 User's Guide" to learn how to use the software.  After you complete going through the user's guide, use the tool to construct a risk matrix for an activity that you are engaging in currently or in the near future.  Examples include applying to graduate school, organizing a party, and working on a class project.

      This activity should take approximately 4 hours to complete.

      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 4.5 Comparisons to Current Risk-Handling Methods  
  • Unit 4 Assessments  
  • Unit 5: The Evolution of Risk Management: Enterprise Risk Management  

    The first three units of this course provided information to help you understand and measure risks, as well as to evaluate risk attitudes and risk behavior. Unit 4 concentrated on risk management and methods for identifying, measuring, and managing risks. This final unit introduces an idea that is critical to the management of risk--the realization that all risks should be treated in a holistic, global, and integrated manner, as opposed to having individual divisions within a firm treating the risk separately. Information technology, globalization, and innovation in financial technologies have all led to a term called “enterprise risk management” (ERM) that includes managing pure opportunity and speculative risks. This concept of Enterprise-wide Risk Management (ERM) was named one of the top ten breakthrough ideas in business by the Harvard Business Review in 2004.

    Unit 5 Time Advisory   show close
    Unit 5 Learning Outcomes   show close
  • 5.1 Enterprise Risk Management within Firm Goals  
  • 5.2 Risk Management and the Firm’s Financial Statement—Opportunities within the ERM  
  • 5.3 Risk Management Using the Capital Markets  
  • 5.4 Risk Management Using the Capital Markets  
  • 5.4.1 Evolution of Financial Markets  

    Note: This topic is covered by the reading assigned below subunit 5.4.  Focus on the text below the heading “Evolution of Financial Markets.”  

  • 5.4.2 Case Study: Financial Risk Management for a Hometown Bank  

    Note: This topic is covered by the reading assigned below subunit 5.4.  Focus on the text below the heading “Example: The Case of Financial Risk Management for the Hypothetical Hometown Bank.”  This case study illustrates the process banks used to manage risk prior to the 2008-2009 credit crisis.  While completing this reading, keep the following question in mind: what are the primary elements of Hometown’s financial risks?  Also, be sure that you understand the information conveyed in Table 5.11 before proceeding to the next resource. 

  • 5.5 Value-Protection Risk Management  
  • 5.6 Case Study: Risk Management in Health Care  
  • Unit 5 Assessments  
  • Unit 6: Risk Management: Advanced Tools  

    This final unit will introduce you to advanced risk management tools.  You will learn how to use data analytics, modeling, and simulation to inform risk management decisions.  You will also learn how to communicate risk to stakeholders.  Last but not least, you will learn the specific roles of risk managers and chief risk officers (CROs) in various organizations.

    Unit 6 Time Advisory   show close
    Unit 6 Learning Outcomes   show close
  • 6.1 Risk Modeling  
  • 6.2 Intersection between Talent and Risk  
  • 6.3 Oversight of Enterprise Risk Management  
  • 6.4 Insurance Solutions  
  • 6.4.1 Nature of Insurance  
  • 6.4.2 Ideal Requisites on Insurability  
  • 6.4.3 Ideal Requisites on Insurability  
    • Reading: Risk Management for Enterprises and Individuals: “Chapter 6: The Insurance Institution and Solutions:” “Section 6.4: Types of Insurance and Insurers”

      Link: Risk Management for Enterprises and Individuals: “Chapter 6: The Insurance Institution and Solutions:” “Section 6.4: Types of Insurance and Insurers” (HTML)
       
      Instructions: Please click on the link above, and read Section 6.4 in its entirety for an overview of types of insurance and insurers.  Also, complete the Discussion questions at the end of the section. 
       
      Reading, note-taking, and answering the Discussion questions should take approximately 2 hours to complete.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above. 

    • Activity: Palisade’s “@Risk;” Dr. Chris Albright’s “Financial Portfolio Model” and “Oil Drilling;” “@Risk 5.x Tutorials;” and “Industry Models”

      Links: Palisade’s “@Risk” (HTML); Dr. Chris Albright’s “Financial Portfolio Model” (Flash) and “Oil Drilling” (Flash); “@Risk 5.x Tutorials” (HTML); and “Industry Models” (HTML)

      Instructions: In this assignment, you will be asked to perform risk analysis using the @Risk software, one of the most popular risk analysis software in the world.  @Risk was developed and marketed by Palisade.  The software will be free for the first 15 days.

      For this assignment, you will be asked to do the following:
      1. Please click on the first link above, which will take you to a free trial version of @Risk.  Click on the button “Free Trial Download” under “@Risk: Now for Microsoft Excel and Microsoft Project.”  This will take you to a page, where you can fill in your personal information.  After you complete the form, click on the “Send my software!” link, and @Risk will be sent to the email address that you provided.  Follow the installation instructions to install @Risk.  You will need Excel already installed on your computer before installing @Risk. 

      2. To learn how to use @Risk, click on the second and third links above.  On the webpage, select the link for “Financial Portfolio Models,” and watch the entire presentation.  Then, on the webpage, select the link for “Oil Drilling,” and watch the entire presentation.  For further information on how to use @Risk, you can click on the fourth link above for “@Risk 5.x Tutorials,” which will provide a detailed tutorial for @Risk.  Make sure that you read the tutorial in its entirety as well as follow the instructions in the tutorial closely.

      3. Once you have completed studying and practicing @Risk, click on the last link above for “Industry Models.”  Scroll down to the section titled "Event and Operational Risks," and download the Excel file: “Example model: EventandOperationalRisks.xls.”  Open the Excel file, and explore the effects of different parameters on the outcomes.

      You should dedicate approximately 4 hours to complete this activity.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpages above.

    • Activity: Pearson Education: George E. Rejda's Principles of Risk Management and Insurance: “Chapter 3: Introduction to Risk Management:” “Web Exercise”

      Link: Pearson Education: George E. Rejda's Principles of Risk Management and Insurance: “Chapter 3: Introduction to Risk Management:” “Web Exercise” (HTML)

      Instructions: Please click on the link above, which will take you to the Student Resources webpage for George E. Rejda's Principles of Risk Management and Insurance.  Select the link to “Chapter 3: Introduction to Risk Management.”  Then, click on the “Web Exercise” link, and follow the instructions on the webpage to complete the exercise, which will introduce you to captive insurance.
       
      This activity should take approximately 1 hour to complete.

      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above. 

  • Subunit 6.4 Assessment  
  • Final Exam  

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