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2015/2016  KAN-CCMVV4004U  Managing Risk, Uncertainty and the Unknowable

English Title
Managing Risk, Uncertainty and the Unknowable

Course information
Language English
Course ECTS 7.5 ECTS
Type Elective
Level Full Degree Master
Duration One Semester
Start time of the course Autumn, Spring
Timetable Course schedule will be posted at calendar.cbs.dk
Max. participants 100
Study board
Study Board for MSc in Economics and Business Administration
Course coordinator
  • Course administrator Gabriella Stephanie Munch
    Torben Juul Andersen - Department of International Economics and Management (INT)
This elective course will be offered through and administered by INT.
Kontaktinformation: https:/​/​e-campus.dk/​studium/​kontakt eller Contact information: https:/​/​e-campus.dk/​studium/​kontakt
Main academic disciplines
  • Finance
  • Globalization and international business
  • Strategy
Last updated on 02-03-2015
Learning objectives
To achieve the grade 12, students should meet the following learning objectives with no or only minor mistakes or errors: The course aims to provide a general understanding of the way different exposures can be managed in contemporary organizations as they engage in business activities on a global scale.

The course will approach the topic from the perspectives of various academic disciplines that have focused on these managerial issues. This includes quantitative approaches developed in finance and insurance as well as more general analytical frameworks adopted in management, accounting, and strategy.

The course will address current applications of risk management and consider alternative ways in which organizational structure and operational processes may enhance the development of effective strategic responses.

Upon completion of the course, students should be able to:
  • Understand different views on risk management practice
  • Analyze strategic exposures and develop appropriate responses
  • Critique contemporary approaches to corporate risk management
  • Consider ways to deal with uncertainty and complex outcomes
  • Develop more effective risk management approaches
Course prerequisites
The elective is open to all graduate students although some prior knowledge in areas of strategic management, financial analysis, and risk assessment will be an advantage.
Examination
Managing Risk, Uncertainty and the Unknowable:
Exam ECTS 7,5
Examination form Home assignment - written product
Individual or group exam Individual
The exam form provides an opportunity for the students to explore interesting issues related to the course topic, e.g., in the context of a specific company, and work on these throughout the semester. It will also be possible to conduct a comparative study of management practices across an industry or set up other types of relevant studies as per agreement with the faculty.
Size of written product Max. 15 pages
The final report must have a size not exceeding 15 A-4 pages of pure text excluding tables, figures, and appendices enclosed after the main text.
Assignment type Project
Duration Written product to be submitted on specified date and time.
Grading scale 7-step scale
Examiner(s) One internal examiner
Exam period Autumn and Spring
Make-up exam/re-exam
Another examination form
Oral examination in the course syllabus
Description of the exam procedure

Written product produced at home (100% weight). The students are required to submit an individual written study by the end of the course. The study provides an opportunity to explore a range of issues related to various elements of the course topic in the context of a specific company chosen by the student. It is also possible to organize a comparative study of management practices across an industry and engage in other types of relevant studies as per agreement with the faculty. The study report must not exceed 15 pages excluding tables, figures, and appendices.  
Course content and structure

The course provides an overview of risk related corporate considerations as they are dealt with across different academic disciplines including management accounting, strategic decision-making, insurance, financial management, international business, multinational finance, etc. The course integrates diverse contributions to understand the origins of newer enterprise-wide frameworks like Enterprise Risk Management (ERM) and develop approaches that may enhance its potential role as a useful management technique. Through discussions of relevant literatures, contemporary management issues, and concrete business situations, the course will critique current risk management practices with the aim of developing new approaches to respond effectively to foreseeable risks, uncertainty and unknowable conditions. The course will be structured around three-hour class sessions (one session per week) conducted during the semester.
Teaching methods
The class combines lectures with active discussions of current issues and selective case situations.

During classes there will be some interactive sessions with business executives to discuss current topics where prevailing industry dynamic challenge the firm’s strategic response capabilities.

The students will be asked to work on a comprehensive company study and complete a report on associated management issues.

Student workload: 7.5 ECTS
Expected literature

The course material will comprise two books, a collection of professional and academic articles, current policy papers, and case studies (relevant articles, policy papers and cases will be available online).

(1) Andersen, T. J., Garvey, M. and Roggi, O., Managing Risk and Opportunity: The Governance of Strategic Risk-Taking, Oxford University Press, Oxford, England, 2014. (ISBN: 978-0-19-968785-5).

(2) Andersen, T. J. and Schrøder, P. W. Strategic Risk Management Practice, Cambridge University Press, Cambridge, England, 2010. (ISBN: 978-0-521-13215-2)

Reading assignments: 

Session 1 - Andersen, T. J., Garvey, M. and Roggi, O. 2014. Chapter 1 in Managing Risk and Opportunity, Oxford University Press.  Andersen, T.J. and Schrøder, P. W. 2010. Chapter 1 in Strategic Risk Management Practice, Cambridge University Press. Power, M. 2005. ‘The Invention of Operational Risk’, Review of International Political Economy, 12(4), pp. 577-599. Slywotzky, A. J. and Drzik, J., 2005. ‘Countering the Biggest Risk of All’, Harvard Business Review, 82, pp. 78-88. Case:  KN Energy, Inc. (A) (European Case Clearing Corporation #310-271-1)

Session 2 - Andersen, T.J. and Schrøder, P. W. 2010. Chapter 2 in Strategic Risk Management Practice, Cambridge University Press. Andersen, T. J., 2006. ‘Interest rate, foreign exchange, and other commercial risk exposures’, Chapter 2 in Global Derivatives: A Strategic Risk Management Perspective, Pearson Education, pp. 44-85. Andersen, T. J., 2006. ‘A Multinational Risk Management Framework’, Chapter 7 in Perspectives on Strategic Risk Management, CBS Press, pp. 131-146. Miller, K. D., 1992. A Framework for Integrated Risk Management in International Business’, Journal of International Business, pp. 311-331. Case: Lehman Brothers (A) (European Case Clearing Corporation #310-265-1)

Session3 - Andersen, T.J. and Schrøder, P. W. 2010. Chapter 3 and 4 in Strategic Risk Management Practice, Cambridge University Press. Andersen, T. J., 2006. ‘Strategic Exposures and Real Options’, Chapter 10 in Global Derivatives: A Strategic Risk Management Perspective, Pearson Education, pp. 357-396. Leuhrman, T. A. 1998. Strategy as a Portfolio of Real Options, Harvard Business Review, 76(5), pp. 89-99. Miller, K. D. and Waller, H. G., 2003. ‘Scenarios, Real Options and Integrated Risk Management’, Long Range Planning, 36, pp. 93-107. Case: Samsung. 

Session 4-  Andersen, T. J., Garvey, M. and Roggi, O. 2014. Chapter 2 and 3 in Managing Risk and Opportunity, Oxford University Press. Nocco, B. W. and Stulz, R. M. 2006. ‘Enterprise Risk Management’, Journal of Applied Corporate Finance, 18(4), 8-20. Power, M., 2006. ‘Making Risk Auditable: Legislation and Organization’ Chapter 6 in Organized uncertainty – Designing a World of Risk Management, Oxford University Press. Case: The RiskMinds 2009 Risk Managers’ Survey: The Causes and Implications of the 2008 Banking Crisis [the full report is available on-line] 

Session 5 - Andersen, T.J. and Schrøder, P. W. 2010. Chapter 5 in Strategic Risk Management Practice, Cambridge University Press. Froot, K. A., Scharfstein, D. S., and Stein, J. C., ‘A Framework for Risk Management”, Harvard Business Review, 1994, 76(6), pp. 91-102. Merton, R. C., ‘You Have More Capital Than You Think’, Harvard Business Review, 83(11), pp. 84-94. Pagach, D. and Warr, R. 2011. ‘The Characteristics of Firms That Hire Chief Risk Officers’, The Journal of Risk and Insurance 78(1), 185-211. Case: The Adoption and Design of Enterprise Risk Management Practices, Working Paper, Paape & Speklé (2011). Nyenrode Business University [accessible online] 

Session 6 - Andersen, T.J. and Schrøder, P. W. 2010. Chapter 6 in Strategic Risk Management Practice, Cambridge University Press. Gates, S., 2006. Incorporating Strategic Risk into Enterprise Risk Management: A Survey of Current Corporate Practice, Journal of Applied Corporate Finance, 18(4). Lam, J., 2003. ‘What is Enterprise Risk Management’, Chapter 4 in Enterprise Risk Management, Wiley, New Jersey, pp. 43-56. Vaughan, D. 2005. ‘System Effects: On Slippery Slopes, Repeating Negative Patterns, and Learning From Mistake?’, Chapter 3 in Starbuck, W. H. and Farjoun, M. (eds.), Organization at the Limit: Lessons from the Columbia Disaster, Blackwell Publishing, Malden, MA, pp. 41-59. Case: Columbia’s Final Mission (Harvard Business School #9-304-090) 

Session 7 - Andersen, T.J. and Schrøder, P. W. 2010. Chapter 7 in Strategic Risk Management Practice, Cambridge University Press. Bargeron, L., Lehn, K. and Zutter, C., 2007. Sarbanes-Oxley and Corporate Risk-Taking. Presented at the American Enterprise Institute [ www.aei.org] Muelbroek, L. K., 2002. ‘Integrated Risk Management for the Firm: A Senior Manager’s Guide’, working paper, Harvard Business School. Nocco, B. W. and Stulz, R. M. 2006. ‘Enterprise Risk Management’, Journal of Applied Corporate Finance, 18(4), 8-20. Case: Institute of Risk Management, IRM, 2002/Federation of European Risk Management Associations, FERMA 2003: ‘A Risk Management Standard’  [available on-line] 

Session 8 - Andersen, T.J. and Schrøder, P. W. 2010. Chapter 8 in Strategic Risk Management Practice, Cambridge University Press. Jeppesen, K. K., 2006. ‘Risk and Complexity in Social Systems: The Case of of the”Business Risk Audit”’, Chapter 5 in Perspectives on Strategic Risk Management, CBS Press, pp. 89-106. Andersen, T. J., 2010. ‘Combining Central Planning and Decentralization to Enhance Effective Risk Management Outcomes’, Risk Management Journal, 12(2), pp. 101-115. Case: Saxo Bank Risk Management Practice (executive presentation) 

Session 9 - Andersen, T. J., Garvey, M. and Roggi, O. 2014. Chapter 4 in Managing Risk and Opportunity, Oxford University Press. Damodaran, A. 2008. ‘Strategic Risk Management’, Chapter 11 in Strategic Risk Taking: A Framework of Risk Management, Wharton School Publishing, 341-365. Mitroff I. I. and Silvers, A. 2010. ‘Screwing Up Royally - An Introduction to Errors of the Third and Fourth Kind’, Chapter 1 in Dirty Rotten Strategies: How We Trick Ourselves and Others Into Solving the Wrong Problems Precisely, Stanford Business Books, 1-28. Weick, K. E. and Sutcliffe, K. M. 2001. ‘What Business can Learn from High Reliability Organizations’, Chapter 1 in Managing the Unexpected, Jossey-Bass, San Francisco, pp. 1-23. Case: Porsche (A) (European Case Clearing Corporation #310-267-1) 

Session 10 - Andersen, T.J. and Schrøder, P. W. 2010. Chapter 9 in Strategic Risk Management Practice, Cambridge University Press. Wang, H., Barney, J. B. and Reuer, J. J., 2003. ‘Stimulating Firm-Specific Investment Through Risk Management’, Long Range Planning, 36, pp. 49-59. Andersen, T. J., 2009. ‘Effective Risk Management Outcomes: Exploring Effects of Innovation and Capital Structure’, Journal of Strategy and Management, 2(4), pp. 352-379. Case: Can LEGO Snap Together a Future in Asia? (HBS Working Knowledge - online) 

Session 11 - Andersen, T. J., Garvey, M. and Roggi, O. 2014. Chapter 5 in Managing Risk and Opportunity, Oxford University Press. Power, M. 2009. ‘The Risk Management of Nothing’, Accounting, Organizations and Society (34), 849-855. Case: British Petroleum (European Case Clearing Corporation, forthcoming)
Last updated on 02-03-2015