Financial Risk Management Center (FRMC)
Financial Risk Management is the process of making and carrying out decisions that minimize the adverse effects of accidental losses.
It involves six steps:
- Identifying exposures to loss ;
- Measuring risk factors ;
- Examining alternative technique ;
- Selecting the best techniques ;
- Implementing the chosen techniques ;
- Monitoring and improving the risk management program ;
In other words, risk management process involves:
- Exposure Identification
- Exposure Measurement : Grasp the range and likelihood of the possible outcomes of the intended action
- Tool Analysis : Analyze various tools that can alter risk exposure. Volatility of interest rates, exchange rates, and prices of major commodities stimulate the demand for risk management tools
- Exposure Management : Select the desired level of exposure and preparing to respond to changes in exposure
- Performance Evaluation : Determine the accuracy of exposure measurement and analytical tools and improving on the quality of risk management.
Applying risk management system is to follow the six steps and conduct the five analyses mentioned above, with a special focus on the valuation of intangible assets.
More specifically, the financial risk management on consumer credit is the main focus in Taiwan’s current financial industry and its regulator, Bureau of Monetary Affairs (BOMA), in the most recent year. Particular attention is related to new Basel Accord risk-based capital rule, which will be enacted in Taiwan by the beginning of year 2007. To keep pace with this “ad-hoc” trend in our domestic market, the goal of forming FRMC division is to provide an excellent opportunity for students to gain industrial leading practice in risk management. In addition, this division involves in developing best practice pricing and risk analysis models to assess the underlying assets being traded or securitized. Therefore, extensive econometrics modeling, cash flow simulations, interest rate modeling, and risk measurement techniques would be performed in order to fare our capability that is visible in the financial markets.
