Strategic Capstone Projects
The Strategic Risk Capstone requires students to build on their own professional experience and exposure to the academic content of the program to create a meaningful project that demonstrates their ability to take an integrated view of risk management in global finance.
Each group is a combination of 4-6 people from different job functions, backgrounds, fields of expertise, etc.
The Capstone will run the full year of the MSRM Program. It allows participants to enrich the projects as each module is completed and relevant tools and insights applies to the project.
This could take a number of forms:
Does Risk Management Matter to Shareholders?
A Framework for Operational Risk Mitigation
Systemic Risk Safeguards for Central Clearing Counterparties
Corporate Risk Management Experiences During the 2008 Crisis
Each group is a combination of 4-6 people from different job functions, backgrounds, fields of expertise, etc.
The Capstone will run the full year of the MSRM Program. It allows participants to enrich the projects as each module is completed and relevant tools and insights applies to the project.
This could take a number of forms:
- The global financial implications of a specific risk management technique, instrument, or market
- The impact of risk management on the competitive positioning and strategic execution of firms (or a particular firm) in global financial markets and particular market segments
- An in-house project to examine a key risk management issue of interest to that firm
- An assessment of probable future directions in the development of specific instruments, techniques, or markets associated with risk management
Does Risk Management Matter to Shareholders?
- The authors of this paper pose a question that is central to any student devoting a year to studying risk management: Does it matter to shareholders? The authors develop a creative research design that allows them to test whether firms with more sophisticated risk management techniques have different characteristics (e.g. Tobin's Q, financial leverage, and stock return volatility) compared to firms with an unsophisticated approach to risk management. Their empirical analysis confirms that there are statistically significant differences between firms with sophisticated versus unsophisticated risk management practices as it pertains to Tobin's Q, financial leverage, and stock market volatility. Measured by these indicators, the authors conclude that risk management matters for certain operational parameters of the firm (leverage) and the resultant financial market outcomes (Tobin's Q and leverage).
A Framework for Operational Risk Mitigation
- This paper attempts to develop a new framework, dubbed CRAM for Corporate Risk Adaptation Model, to identify firms with the likelihood of avoiding a catastrophic operational risk event, or surviving one if the event were to occur. CRAM relies on 4 categories of data (People, Process, Governance, and External) and 12 key factors that populate the categories. The authors draw on 5 case studies (WorldCom, MT Global, Toyota, Enron, and Marsh & McLennan) to make an initial calibration of the model, but then include several other firms (Apple, Google, Starbucks, Mastercard) as a way to check whether the model classifies these successful companies as “good.”
Systemic Risk Safeguards for Central Clearing Counterparties
- The authors of this project have tackled a large and complex issue that stands in the foreground of the Dodd-Frank policy agenda. Dodd-Frank mandates a much larger role for central counterparties (CCPs) to handle the clearing and settlement of derivative transactions that historically were largely traded and cleared on a bilateral basis. Putting many eggs in a single basket clearly elevates the need to watch the basket. The authors of this project dissect various sources of capital that underlay a generic CCP, and then run a series of simulations subjecting the CCP to stress conditions in order to assess how many layers of the risk waterfall are impacted under different stress scenarios.
Corporate Risk Management Experiences During the 2008 Crisis
- The project addressed how various firms, most of which were in the food sector and therefore heavily exposed to commodity price changes, responded to the financial turbulence of the 2008 crisis. The authors developed a common template of data, narrative, tables and charts to include for each of the seven companies in the sample. The sample included companies headquartered in the USA and Latin American, some primarily privately owned and others publicly held, and so offered a reasonable cross section of firms, some of which managed their way through the multitude of risks in the crisis and others of which succumbed by having to take on substantial new debt or bankruptcy.