Market Risk Management: Frameworks & Strategies from Coursera

This course provides the foundation for understanding the frameworks used to develop market risk management strategies. You will identify the market risks associated with each type of financial instrument. You will be introduced to techniques for estimating the risk associated with each class of investments. By the end of the course, you will be able to select the most effective derivatives for managing risk of a single asset and a portfolio of assets, develop asset selection strategies for managing risk in a portfolio, and model risk associated with a single asset and a portfolio of assets.

Learners will complete a project covering the estimation and analysis of risk in a globally diversified equity portfolio. The portfolio will include allocations of equity indexes from the U.S., Japan, Hong Kong, and Germany. Data for the two years prior to March 2020 will be used to convert daily returns in each indexes' currency into dollar returns. Value-at-Risk and Expected Shortfall for the portfolio will be calculated using an equal-weighted sample and an exponentially weighted sample. Learners will then be given a new 2-year data set that includes the market data through August of 2020. They will be asked to re-evaluate risk for the portfolio using Value-at-Risk and Expected Shortfall.

What's inside

Syllabus

Getting Started

Traffic lights

Read about what's good

what should give you pause

and possible dealbreakers

Explores market risk management frameworks, which are crucial for risk managers, financial analysts, and investors

Offers hands-on project experience in modeling risk associated with a globally diversified equity portfolio, providing practical insights

Taught by Jack Farmer, an experienced instructor in the field of financial risk management

Provides a comprehensive understanding of market风险, including measurement, analysis, and management techniques

Covers relevant topics such as financial instruments, derivatives, and risk modeling, which are essential for professionals in finance

Prerequisites may be needed, as the course requires a solid foundation in financial concepts and statistical methods

Reviews summary

Market risk management fundamentals & practice

According to learners, this course offers a solid foundation in market risk management, lauded for its clear explanations of complex financial instruments and risk metrics like VaR and Expected Shortfall. Students consistently highlight the practical, hands-on course project as a key strength, enabling them to apply concepts to real-world scenarios. While largely positive, some caution that the course's depth is best suited for beginners or those seeking a comprehensive refresher. A recurring point of feedback is the outdated data used in the project, which some found detracts from the immediate relevance of calculations, suggesting a need for updates to reflect current market conditions. Overall, it’s considered highly relevant for finance professionals.

Strong for beginners/refreshers, less for advanced practitioners.

"Good for beginners, less so for experienced practitioners."

"While it touched on many topics, I didn't feel I gained deep expertise."

"It covers the fundamentals but could use more advanced topics."

"The depth was just right for foundational understanding."

Real-world project solidifies learning and builds practical skills.

"The practical project was incredibly useful, applying concepts to a real equity portfolio."

"The project was challenging but rewarding. It's a valuable course for those in finance."

"I loved the practical project that allowed me to apply what I learned immediately."

"The hands-on project was invaluable. I now feel much more equipped to handle market risk in my role."

Instructor simplifies complex financial concepts effectively.

"The instructor explains complex topics like VaR and Expected Shortfall very clearly."

"The clarity of the explanations for complex topics is outstanding."

"The instructor's ability to simplify complex financial instruments and risk measures is truly commendable."

"I found the course very useful... The instructor breaks down difficult concepts effectively."

Some learners found explanations too high-level without background.

"I felt the explanations were too high-level at times, especially for someone without a strong quant background."

"I think it assumes a certain level of prior knowledge that isn't explicitly stated."

"More step-by-step examples and supplementary material would be beneficial."

Project uses historical data, not reflecting current market conditions.

"The data used in the project was a bit outdated for current market conditions (pre-March 2020)."

"I would have liked to see more updated data for the project, reflecting more recent market volatility."

"The project data being from before 2020 is a minor issue, but it does make one question the currency of some methodologies presented."

"Agree with others that updating the data would be beneficial."

Activities

Be better prepared before your course. Deepen your understanding during and after it. Supplement your coursework and achieve mastery of the topics covered in Market Risk Management: Frameworks & Strategies with these activities:

Review financial fundamentals

Show steps

Review the basics of financial management, including financial ratios and time value of money, to prepare for understanding market risk management.

Browse courses on Finance

Show steps

Review financial ratios
Review time value of money concepts

Assist at a non-profit organization focused on financial literacy

Show steps

Develop a deeper understanding of the practical applications of financial risk management by assisting individuals in managing their personal finances.

Browse courses on Financial Literacy

Show steps

Identify a non-profit organization focused on financial literacy
Offer your time to volunteer and assist with their programs
Engage with clients and provide guidance on managing financial risks

Assist fellow students in understanding market risk concepts

Show steps

Reinforce your understanding of market risk by providing guidance and support to fellow students who may be struggling with the concepts.

Browse courses on Mentoring

Show steps

Identify a peer who may benefit from your support
Offer to explain specific concepts or answer their questions
Meet regularly to provide guidance and feedback

Five other activities

Expand to see all activities and additional details

Show all eight activities

Calculate market risk metrics

Show steps

Practice calculating Value-at-Risk (VaR) and Expected Shortfall (ES) for various financial instruments to enhance your understanding of market risk measurement.

Browse courses on Market Risk

Show steps

Calculate VaR for a stock using the historical simulation method
Calculate ES for a portfolio of bonds using the Monte Carlo simulation method

Attend a market risk management workshop

Show steps

Gain practical insights and hands-on experience in market risk management techniques through a specialized workshop.

Browse courses on Market Risk

Show steps

Research and identify relevant market risk management workshops
Register and attend the workshop
Actively participate in discussions and exercises

Explore case studies on risk management

Show steps

Analyze real-world examples of how organizations manage market risk to gain practical insights into the application of risk management strategies.

Browse courses on Case Studies

Show steps

Read a case study on risk management in the banking industry
Attend a webinar on risk management in the investment industry

Read "Risk Management in Financial Institutions"

Show steps

Gain a comprehensive understanding of the theoretical foundations and practical applications of risk management in financial institutions.

View Risk Management and Financial Institutions... on Amazon

Show steps

Read Chapter 1: Introduction to Risk Management
Read Chapter 4: Market Risk Measurement and Management

Develop a risk management presentation

Show steps

Create a presentation that outlines the key concepts of market risk management and presents real-world examples of its application. Share your presentation with peers for feedback and discussion.

Browse courses on Risk Management

Show steps

Define the scope and objectives of your presentation
Research and gather relevant information on market risk management
Design and develop your presentation slides
Practice your presentation and gather feedback from peers

Career center

Learners who complete Market Risk Management: Frameworks & Strategies will develop knowledge and skills that may be useful to these careers:

Financial Risk Analyst

Financial Risk Analysts gauge the potential for financial loss within companies and make recommendations for managing and reducing it. Courses that teach about measuring, analyzing, modeling, and managing financial market risk can help Financial Risk Analysts excel at their jobs.

See salaries and explore the career path for Financial Risk Analyst

Quantitative Analyst

Quantitative Analysts develop and apply mathematical and statistical models to solve problems and analyze financial data. Training in the frameworks, strategies, and estimation techniques for market risk management is extremely relevant for Quantitative Analysts.

See salaries and explore the career path for Quantitative Analyst

Portfolio Manager

Portfolio Managers make investment decisions for individuals and institutions, selecting investments to meet financial goals. A course on frameworks and strategies for market risk management may help Portfolio Managers develop strategies that manage risk.

See salaries and explore the career path for Portfolio Manager

Financial Analyst

Financial Analysts analyze financial data to make recommendations for investments and advise businesses on financial decisions. Knowledge of market risk management can help Financial Analysts understand risks and make sound recommendations.

See salaries and explore the career path for Financial Analyst

Investment Analyst

Investment Analysts evaluate and make recommendations on potential investments. They may specialize in a particular industry, type of investment, or geographic region. A course on market risk management can help Investment Analysts identify and mitigate risks associated with investments.

See salaries and explore the career path for Investment Analyst

Hedge Fund Manager

Hedge Fund Managers oversee investment funds designed to generate high returns for investors. Understanding market risk management frameworks and strategies is crucial for them to successfully navigate market risks and maximize returns.

See salaries and explore the career path for Hedge Fund Manager

Risk Manager

Risk Managers identify, assess, and manage risks within organizations. A course on market risk management can provide Risk Managers with the necessary expertise to develop comprehensive risk management strategies.

See salaries and explore the career path for Risk Manager

Insurance Underwriter

Insurance Underwriters assess and evaluate risks associated with insurance policies to determine premiums. A course on market risk management may help Insurance Underwriters better understand and quantify risks involved in underwriting insurance policies.

See salaries and explore the career path for Insurance Underwriter

Credit Analyst

Credit Analysts assess the creditworthiness of individuals, companies, or countries. They may work for banks, investment firms, or credit rating agencies. A course on market risk management can help Credit Analysts evaluate the riskiness of borrowers and make informed lending decisions.

See salaries and explore the career path for Credit Analyst

Compliance Officer

Compliance Officers ensure that companies adhere to regulatory and legal requirements. Knowledge of market risk management can assist Compliance Officers in evaluating and managing risks associated with regulatory compliance.

See salaries and explore the career path for Compliance Officer

Sales Trader

Sales Traders execute buy and sell orders for clients, ensuring efficient and timely transactions. A course on market risk management may help Sales Traders understand and mitigate risks associated with trading financial instruments.

See salaries and explore the career path for Sales Trader

Market Research Analyst

Market Research Analysts conduct research and analyze market trends and consumer behavior. A course on market risk management may help Market Research Analysts understand and evaluate risks associated with market dynamics and consumer behavior.

See salaries and explore the career path for Market Research Analyst

Data Analyst

Data Analysts collect, analyze, and interpret data to identify trends and patterns. A course on market risk management may help Data Analysts understand and evaluate risks associated with data analysis and interpretation.

See salaries and explore the career path for Data Analyst

Financial Advisor

Financial Advisors provide financial advice and services to individuals and families. A course on market risk management may help Financial Advisors understand and manage risks associated with investment portfolios.

See salaries and explore the career path for Financial Advisor

Corporate Finance Analyst

Corporate Finance Analysts assess the financial performance of companies and provide recommendations for financial decisions. A course on market risk management may help Corporate Finance Analysts understand and evaluate risks associated with corporate finances.

See salaries and explore the career path for Corporate Finance Analyst