Strategic Management Course Description
Strategic management
Course description
Stuart Lawson
Risk management, financial and non-financial risks. The course will provide students with a practical framework to manage the differing types of risk (operating, financial, political systemic, management, physical) that they are likely to encounter in their careers.
Pedagogical approach
The approach will focus on the practical elements of risk management and whilst
there will be references to the theory of risk management, the core focus will be on real life situations.
The course will use case studies to illustrate key points that then will be discussed by the class in teams. Guest speakers will be drawn from a wide range of industries and will bring risks and their management to life.
The role-playing for the credit application will create an environment in which the class will review a business plan and then seek to defend a proposal to establish credit facilities with a bank. The objective will be to focus specifically on the risk element of the proposal and to experience the review of a senior credit officer.
Course objectives
Analyze the constellation of risks that exist within the business world, their differing characteristics and their potential impact on the dynamics of the business model.
Develop an understanding of financial and operating risk, its components and impact. Viewed from the perspective of banking, what are the implications of differing risks and how can these be mitigated?
Enable students to understand the impact of a crisis on the business model and management. Analyze the role of a crisis manager and the tools needed to survive unexpected, negative events.
Experience the process of creating and defending an application for credit facilities from a bank. This will enable the students to gain a banker’s eye perspective.
Grading
30% - class participation
15% - preparing responses for the cases (+ in written form)
15% - restructuring
40% - final assignment – approval
Pre-reading
Mandatory: Failure of Risk Management, Hubbard
Proposed: Black Swan, Essentials of Risk Management
The Big Short, Martin Lewis
Course outline
Class 1
Lecture/discussion; an introduction to financial and non-financial risk management
Class discussion on what constitutes a risk (operating, financial, physical etc). Emphasis will be placed on defining a very broad range of risks. The analysis will then explore the connectivity of risks and the importance of the dynamics of risk over time.
What are the Black Swans and how do they affect our view of risk?
What impact do these risks have on the business model and what tools can be used to mitigate them? Focus will be on how to measure risk and the importance of creating a forward-looking ‘radar’.
Introduction to Restructuring
Case studies:
- “British Airways 268”, Darden UVA E 0293
- “Six mistakes Executives Make in Risk Management”, Taleb, Goldstein, Spritznagel HBR reprint R0910G October 2009
- “Reputation and Risks”, Eccles, Newquist, Schlatz, HBR reprint R0702F
- “Dirty White Swans”, Insead 810-025-5
- “The 4 Quadrants”, 210-017-5
- “Managing Risk in the New World”, HBR R0910E
Class 2
Class 3
Other operating risks.
Detailed review of types and impact of risks:
ž-Industry
ž-Political
ž-Company
ž-Financial
ž-Technological (information security)
ž-Operational
ž-Management
ž-Legal
ž-Reputational
ž-Human capital
ž-PR
Breakout session teams to create presentation on risks and their proposed mitigants. Learnings would include the importance of understanding the extent of risks faced, scenario planning and sticking to an action plan.
Team presentation of the case study and learnings.
Case studies:
- “Challenger”
- “Columbia’s final mission”, Harvard Business Publishing (9-304-090)
- “NASA after Challenger: restoring an image”, Harvard Business Publishing (9-591-009)
Class 4
Lecture/ discussion; the human element in Risk, impact of management.
The objective is to highlight the importance of the management element in control of risks.
Decision-making in crisis, what are the core competences? Specifically what differentiates the winners from the losers.
Role of a crisis manager. This role is critical and requires a skill set that can be learned. Importance of maintaining flexibility whilst rigidly enforcing the action plan. Short case studies from the author’s experience.
Case studies:
- Enron. “Fall of Enron”, HBR 9-109-039
Failure of management. Focus will be on how the situation developed and the role of management in its collapse. Key issues around integrity will be explored and warning signs analyzed
Break-out session for case analysis. Team presentation of risks encountered in Enron.
- Citibank. ICMR 309-190-1
Decline, fall and recovery.
Class 5
Lecture/the banker’s perspective.
What are the components of financial risk? Review the differing on and off balance sheet financials risks and their impact on the business model.
Tools used by companies and banks to manage financial risk. Analysis of counterparty, liquidity risks. Use of hedges and swaps, role of debt rating etc.
How does a bank look at risk?
The objective is to allow students to experience the process of a credit approval from a bank and to understand the key decision points and observations that a banker is likely to use in making their judgement.
Briefing on what to look for.
Review of materials by teams and create presentations
Present risks for review
Feedback and summary
Case studies:
- “Tip of the iceberg: JPM Chase and Bear Sterns”, 9-309-001
Class 6
Management of PR Risk and module wrap-up.
Case studies:
- BP case
- “Crisis Management at Toyota”, Quemer, Purkayoastha, 510-086-1
- “Contingency Planning: preparing today for tomorrow’s problems”, Harvard, ISBN-10, 1_4221-0660-8
- “Containment: Preventing a Bad situation from getting worse”, Harvard, ISBN-10, 1_4221-0645-4
- “After the oil spills: transformation at the JIC”, Darden UVA-OB-1011
Practical CEO
What are the initial steps on taking control of a bank as CEO
What issues should you be aware of?
What can go wrong and how to avoid the worst consequences