Prominent B-schools in the country are using the financial turmoil as an opportunity to strengthen the awareness of risk management as a subject, while students seem to think of the discipline as a lucrative profession.
Risk management and financial derivatives are established courses at the Indian Institute of Management, Lucknow (IIM-L). There is a dedicated course on financial derivatives providing an in-depth understanding of derivative products to mange risk.
A Vinay Kumar, associate professor of finance, IIM-L, says: “Risk management alternatives for Indian companies have increased over time with the introduction of new derivative products and liberalisation of regulation. The current challenge facing Indian companies is that given the limited depth of derivative markets, how should one hedge the exposure. Coupled with it is a lack of understanding on how derivatives need to be used. A lot of our problems are related to the understanding on usage of derivative products and we have, to a great extent, addressed that problem through curriculum development in our flagship PGP program and executive programmes at our level.”
The courses at IIM Lucknow not only are technique-intensive but also emphasise learning from live risk management failures. “Perhaps this is one reason that our students have got successfully placed in various multi-national companies and Indian banks and are serving the risk management / securitisation departments. Many of our students have also benefited from these courses in managing the market volatility and are equipped to deal with extreme market conditions,” adds Kumar.
IIM-Bangalore (IIM-B) recently designed a 4-day course on Business Analytics at its campus. Besides covering the finance, marketing and supply chain management, the course focused on risk management as an essential tool for an organisation.
At Jamnalal Bajaj Institute of Management Studies (JBIMS), risk management is taught as an elective. “Although earlier, students preferred more popular electives such as Corporate Valuation, this year there are quite a few takers for the risk management course. Also a basic view of risk management is part of the Advanced Financial Management course. It is just that the theories were considered too conservative in the market,” says Chandrahauns Chavan, director of JBIMS.
More From This Section
K J Somaiya Institute of Management Studies (KJSIMS) is planning to conduct seminars and workshops on risk management, apart from increasing its focus on the subject. The institute is also mulling a short term programme on risk management. “Risk management as a course is fashionable at the time of crisis and several dimensions of risk management have undergone a drastic change. It is now being viewed as a global need-based subject that requires thorough understanding for handling various situations. Our institute has been running courses on risk management in our MBA programme. However, we have now informed our faculty members to increase the focus on risk management and incorporate varied activities surrounding it,” says Suresh Ghai, director, KJSIMS.
IIM Indore (IIM-I) had organised a programme on Derivatives and Risk Management as part of its Management Development Programmes. The five-day programme focussed on how risk management creates value, development and empirical evidences on current practices. At Rs 23, 000 per participant, the programme was aimed at risk managers, analysts, financial executives working in risk management division of any corporate or financial institution.
“Awareness of the current market conditions is the feature of any good management course. So, it comes as no surprise that JBIMS students have taken up voluntary projects in addition to the coverage of the subject in the classroom. A point in case is the project on “Reinsurance” undertaken by one of the students wherein a basic study of the concept and its relevance in the Indian context has been understood. Such a project not only stirs students to think in such lesser known important concepts, but also opens up the opportunity for career choices. Students have also been taking up the Financial Risk Management (FRM) certification, which gives them further in-depth knowledge on the subject,” adds Chavan.
Students are also looking at taking up risk management as a profession. “The markets are behaving the way they ought to and it is for us to manage the risks involved in participating as a stakeholder in the financial markets. In fact, starting from the Bear Stearns to the Lehman Brothers, Merrill Lynch and AIG Debacle, everything boils down to the different aspects of risk and how it was probably mis-managed, ” says Lalitha Ganesh, a 2nd year student at the Xavier Institute of Management.