Banking and Financial Markets: A Risk Management Perspective

By P C Narayan   |   Indian Institute of Management Bangalore (IIMB)
Learners enrolled: 5583
Banking and financial markets encompass the ‘ecosystem’ that (a) channelizes money from those who have it (i.e. savers/investors) to those who need it (i.e. borrowers) and (b) facilitates cross-border flow of funds through exchange of currencies. That ecosystem of banks and financial markets (including Central Banks) has deepened in size, sophistication and complexity over the years. However, in recent times they have also been the subject of abuse, failures and economic distress in several countries resulting in a ‘contagion’ that has concurrently affected several countries around the world!

More recently, and perhaps more importantly, thanks to the liberalization of most economies, the world has witnessed an exponential increase in the free flow of capital across countries. Banking institutions and financial markets, being the predominant conduit for such free flow of capital across countries, have therefore become even more "globally interconnected." Such a globally interconnected financial system, combined with regulatory systems that are country-specific and hence varying considerably in rigor and implementation, has further compounded the risks and the consequent contagion, as witnessed in the global financial meltdown that was triggered in 2008.

This course will look at banking and financial markets from a risk management perspective where you will learn about:

  •     How to measure and manage credit risk, interest rate risk, foreign exchange risk, operational risk, off-balance sheet risk, etc. in any financial system.
  •     How these risks have become ‘omnipresent’ and significantly more complex as a result of globalization and interconnectedness of banking and financial markets across countries.
  •     Liquidity and solvency issues in financial institutions and markets and how they could be managed.
  •     The structure of asset securitization and credit derivatives and their role in managing (sometimes augmenting) risks in any financial system.
  •     How to measure, quantify and analyze the level and degree of financial risk over a stipulated time frame using different tools and techniques such as Value at Risk (VaR), Stress Test, etc.
  •     The role of regulation and monetary policy to: (a) ensure the stability and longevity of any financial system and (b) minimize the impact of possible adverse outcomes and contagion effects implicit in any financial crisis, particularly when the financial systems are globally interconnected.
Course Status : Completed
Course Type : Core
Duration : 6 weeks
Category :
  • Management Studies
Credit Points : 2
Level : Postgraduate
Start Date : 31 Jan 2021
End Date : 30 Apr 2021
Enrollment Ends : 28 Feb 2021
Exam Date :

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Course layout

Week 1: Overview of Risk Management:
  • Overview of Risk Management in Banking and Financial Markets
  • Liquidity & Solvency Risk
  • Overview of Liquidity and Solvency
  • Managing Liquidity (CRR and SLR)
  • Managing Solvency & Capital
  • Adequacy (BASEL- I)
  • Liquidity Risk Management
  • Operational Risk: Measuring and Managing Operational Risk
Week 2: Credit Risk
  • Retail Lending
  • Lending to SMEs
  • Measuring and Managing Credit Risk
  • Monitoring Credit Risk
  • Credit Risk Assessment Models
  • Loan Concentration Risk
  • Loan Portfolio Risk
  • Off-Balance Sheet Risk
Week 3: Interest Rate Risk
  • Overview of Interest Rate Risk
  • Yield Curve: An Overview
  • Measuring and Managing IRR: Repricing Model
  • Measuring and Managing IRR: Duration Gap Analysis
  • Interest Rate Derivatives
  • Interest Rate Futures
  • Interest Rate Swaps
  • Risk Measurement Matrices
  • VaR (Value at Risk)
  • Stress Test
Week 4: Foreign Exchange Risk
  • Recap of Foreign Exchange Risk Concepts and Terminology
  • Foreign Exchange Risk: Introduction
  • Managing Foreign Exchange Risk:
  • Transaction Exposure
  • Translation Exposure
  • Operating Exposure
  • Currency Futures
  • Currency Options
Week 5: Asset Securitization, CDO & CDS
  • Asset Securitization: An Overview
  • Basic Attributes, Cash Flows and Structuring
  • Payment Structure
  • Credit Rating and Credit Enhancements
  • Types of Securitization: Residential Mortgage Backed
  • Securities (RMBS)
  • Credit Card Securitization
  • Credit Enhancements using CDS
  • Collateralized Debt Obligations
Week 6: BASEL II, BASEL III and Regulation & Monetary Policy
  • Basel II Guidelines for Capital Adequacy
  • Basel III Guidelines
  • Regulation & Monetary Policy
  • Regulation and Monetary Policy for Banks
  • Need for Independence of Central Banks
  • 2008 Financial Crisis

Instructor bio

P C Narayan

Indian Institute of Management Bangalore (IIMB)
P C Narayan is a faculty member in the Finance & Accounting Area at the Indian Institute of Management Bangalore (IIMB), where he has been teaching since 2003. His areas of research interest and expertise include risk management, banking and financial markets, international finance, regulation and monetary policy and technology related to banking and financial markets. His PhD thesis won the ‘Outstanding Doctoral Research Award’ of the European Foundation for Management Education and Emerald Publishing in 2013. He won the ‘Teaching Innovator Award-2016’ from the Ministry of Human Resources Development, Government of India for his innovative and effective use of technology in the graduate class-room. He was a member of the Advisory Group of the Unique Identification Authority of India (UIDAI) set up by the Government of India in 2009. He consults for and trains managers in several organizations in India and abroad in the banking, manufacturing and information technology sectors. Prior to joining IIMB, he was based overseas for several years with a multinational bank and subsequently as the President of a bank in India. Having spent many years in industry as well as in academia and having travelled to over 40 countries and having worked in 20 different countries, he brings a breadth of global experience and a unique cross-cultural perspective in his teaching and research.

Course certificate


Type of exam: Computer based exam 

You will have to appear at the allotted exam centre and produce your Hall ticket and Government Photo Identification Card for verification and take the exam in person. 
You can find the final allotted exam centre details in the hall ticket. The questions will be on the computer and the answers will have to be entered on the computer; type of questions may include multiple choice questions, fill in the blanks, essay type (subjective) type, etc. 


Weightage: 25% weightage for weekly assignment + 75% weightage for final exam. 

Passing Marks: You will be eligible for Certificate only if you score minimum 40% in Weekly Assessment and minimum 40% in Final Exam. 

If you score less than 40% in either weekly assessments (average) or in final exam, you will not receive the certificate. 

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