The course note chapters are selected from Lecture Notes on Advanced Corporate Financial Risk Management, produced by John E. Parsons and Antonio S. Mello. Used with permission.
| SES # | TOPICS | READINGS | COURSE NOTES | CASES |
|---|---|---|---|---|
| L1 |
Hour 1: Introduction: the role of risk management; how companies manage risk; why companies manage risk Hour 2: Case discussion Hour 3: Measuring risk, part A: exposure |
Nichols, Nancy A., and Judy Lewent. "Scientific Management at Merck: An Interview with CFO Judy Lewent." Harvard Business Review, January 1, 1994. Carter, David A., Daniel A. Rogers, and Betty J. Simkins. "Hedging and Value in the U.S. Airline Industry." Journal of Applied Corporate Finance 18, no. 4 (2006): 21-33. Prada, Paolo. "Fuel Hedges Cloud Airline Results." Wall Street Journal, October 17, 2008. Campbell, Alexander. "Flight Plan." Risk Magazine, May 2008. Gordon-Walker, Anna. "A Feast of Futures." Risk Magazine, December 2006. Davidson, Ryan. "The State of Freight." Risk Magazine, July 2008. |
Chapter 1: Introduction (PDF) Chapter 2: How Companies Manage Risk (PDF) Chapter 3: Why Companies Manage Risk (PDF) |
Perold, Andre F., Arthur I. Segel, Oliver Corlette, and Soyoun Song. "Grosvenor Group Ltd." Harvard Business School Case. Boston, MA: Harvard Business School Publishing. Case: 9-207-064, Rev. October 1, 2007. |
| R1 | Assistance with problem set 1 | Chapter 6: Measuring Risk—Dynamic Models, Part A | ||
| L2 |
Hour 1: Measuring risk, part B: dynamic models Hour 2: Case discussion Hour 3: Pricing risk |
Andrén, Niclas, Håkan Jankensgård, and Lars Oxelheim. "Exposure-Based Cash-Flow-at-Risk: An Alternative to VaR for Industrial Companies." Journal of Applied Corporate Finance 17, no. 3 (2005): 76-86. Davies, Rob. "Oil and Water Do Mix." Risk Magazine, June 2008. Maloney, Peter J. "Managing Currency Exposure: The Case of Western Mining." Journal of Applied Corporate Finance 2, no. 4 (1990): 29-34. Jung, Jayne. "Total Control." Risk Magazine, April 2008. Davidson, Ryan. "Paying the Dollar Price." Risk Magazine, August 2008. Nocera, Joe."Risk Mismanagement." New York Times Magazine, January 2, 2009. Almeida, Heitor, and Thomas Phillippon. "Estimating the Risk-Adjusted Costs of Financial Distress." Journal of Applied Corporate Finance 20, no. 4 (2008): 105-109. |
Chapter 6: Measuring Risk—Dynamic Models (PDF) Chapter 9: Pricing Risk (PDF) |
Tufano, Peter, and Cameron Poetzscher. "Aspen Technology, Inc.: Currency Hedging Review." Harvard Business School Case. Boston, MA: Harvard Business School Publishing. Case: 9-296-027, Rev. July 18, 1996. |
| R2 | Turn in and review problem set 1 | |||
| R3 | Turn in and review problem set 2 | Chapter 9: Pricing Risk, Part A | ||
| L3 |
Hour 1: Valuation Hour 2: Case discussion Hour 3: Trading operations |
Mathews, Scott, Vinay Datar, and Blake Johnson. "A Practical Method for Valuing Real Options: The Boeing Approach." Journal of Applied Corporate Finance 19, no. 2 (2007): 95-104. Vaidyanathan, Viswanath, Dave Metcalf, and Douglas Martin. "Using Capacity Options to Better Enable Our Factory Ramps." Intel Technology Journal 9, no. 3 (2005): 185-192. Nagali, Venu, et. al. "Procurement Risk Management (PRM) at Hewlett-Packard Company." Interfaces 38, no. 1 (2008): 51-60. Davis, Anne. "Tyson Foods Refines a Recipe by Energy Firms." Wall Street Journal, December 1, 2006. White, Gregory. "Precious Commodity: How Ford's Big Batch of Rare Metal Led to $1 Billion Write-Off." Wall Street Journal, February 6, 2002. Parsons, John E. "Do Trading and Power Operations Mix? The Case of Constellation Energy Group 2008." MIT Center for Energy and Environmental Policy, Working Paper 0814, November 2008. |
Tufano, Peter, and Alberto Moel. "Bidding for Antamina." Harvard Business School Case. Boston, MA: Harvard Business School Publishing. Case: 9-297-054, Rev. September 15, 1997. | |
| R4 | Turn in and review problem set 3 | |||
| L4 |
Hour 1: Financial policy, and liability management Hour 2: Case discussion Hour 3: Strategic hedging |
Mello, Antonio S., and John E. Parsons. "Natural Resource Projects: Debt Contracts that Increase Profits, Decrease Defaults." e-lab, October 1989-March 1990. Gold, Russell. "Investment Forecast: On a Roller Coaster, One Energy Firm Tries Hedging Bets; Natural-Gas Giant Chesapeake Has Expanded Rapidly by Locking in its Revenue; Dangers of Guessing Wrong." Wall Street Journal, November 6, 2006. "Asset Buyers Gamble On Futures Strip." Petroleum Intelligence Weekly, July 3, 2006. Kale, Jayant R., and Husayn Shahrur. "Corporate Leverage and Specialized Investments by Customers and Suppliers." Journal of Applied Corporate Finance 20, no. 4 (2008): 98-104. Pinkowitz, Lee, and Rohan Williamson. "What is the Market Value of a Dollar of Corporate Cash?" Journal of Applied Corporate Finance 12, no. 3 (1999): 74-81. Mello, Antonio S., and John E. Parsons. "Strategic Hedging." Journal of Applied Corporate Finance 12, no. 3 (1999): 43-54. Merton, Robert C. "You Have More Capital Than You Think." Harvard Business Review, November 1, 2005. |
Meulbroek, Lisa, and Puja Malhotra. "Risk Management at Apache." Harvard Business School Case. Boston, MA: Harvard Business School Publishing. Case: 9-201-113, Rev. August 27, 2001. | |
| R5 | Turn in and review problem set 4 | |||
| L5 |
Hour 1: Case discussion Hour 2: Governance and control Hour 3: Feedback and student evaluations |
Culp, Christopher L., and Merton H. Miller. "Metallgesellschaft and the Economics of Synthetic Storage." Journal of Applied Corporate Finance 7, no. 4 (1995): 62-76. Mello, Antonio S., and John E. Parsons. "Maturity Structure of a Hedge Matters: Lessons from the Metallgesellschaft Debacle." Journal of Applied Corporate Finance 8, no. 1 (1995): 106-121. Madigan, Peter. "The Sewers of Jefferson County." Risk Magazine, June 2008. |
Tufano, Peter, Geoffrey Verter, and Markus F. Mullarkey. "Cephalon, Inc." Harvard Business School Case. Boston, MA: Harvard Business School Publishing. Case: 9-298-116, April 13, 1998. |