Jason Schenker of Prestige Economics discusses nine types of corporate risk, including financial and nonfinancial risks. He explains the difference between direct risks that companies face constantly, as well as indirect risks that usually come from vendors, competitors, and counterparties. Then he covers how risks are typically resolved, either by elimination (divestiture or acquisition), transfer (hedging or insuring), offset (creating a natural hedge), or ownership (keeping the exposure). Finally, he reviews how corporations can actively measure and monitor risk by appointing dedicated risk managers, officers, and committees.
- Recognize examples of four types of commodities.
- Explain the difference between direct and indirect risks.
- Define strike price.
- Recall the name of the U.S. central bank.
- Recognize examples of commonly hedged financial markets.
- Identify the most important measure of corporate risk.
Skill Level Beginner
- Risk management isn't something most companies think about until it's too late. Wouldn't you like to be the one who thinks about things before they go bad? Imagine if you could have saved Enron from imploding, Blockbuster from being wiped away, or if you could have prevented the financial crisis of 2008. Making risk management a priority could have prevented all of these things. It's too late to change the past, but as an ancient Chinese proverb says, the best time to plant a tree was 20 years ago.
The second best time is now. I'm Jason Schenker, and I have advised executives on risk for nearly 15 years. I've worked in both investment banking and consulting, and since 2009, I've directly advised senior leaders on financial market risk, corporate risk, economics and business strategy. I'm also a financial market expert, and Bloomberg News has ranked me the number one forecaster in the world in over 20 categories since 2011. They've even asked me to write for them because of my track record, and my column is appropriately called Bloomberg Prophets.
In this course, you'll learn about nine different kinds of financial and non-financial risks that you will then be able to identify and hopefully, be able to reduce or mitigate. We will also examine some of the financial risk management solutions like options, swaps, futures and forwards, that traders and risk managers use to manage their financial market risks. It's important to know what these are and how they work. But don't worry, we won't be doing any crazy math in this course. Finally, we will look at how risk management actually works in companies.
People talk about risk management, but I get very hands on about collecting and presenting different quantitative and qualitative data. And I discuss some important best practices. By the end of this course, you'll see risks that you might have missed before, and you'll have some idea as to what solutions could be applied. Plus, you'll know how to measure these risks and who needs to monitor these risks and your solutions. In short, you'll know how to spot risks, how to deal with risks, how to measure them and who to work with to make sure they don't knock your company down.
With that in mind, let's get started.