Analysis and Management of Financial Risk

  • Summer schools
  • Department of Finance
  • Application code SS-FM202
  • Starting 2019
  • Short course: Open
  • Location: Houghton Street, London

This course helps to develop the relevant knowledge and understanding of risk management practices for students aiming to advance their careers in financial risk management.

The course is roughly divided in to four parts:

We start with an introduction to the classification of risk and the basic principles of diversification and hedging, optimal portfolio choice. This will include an overview of the Capital Asset Pricing Model, which is widely applied for the equilibrium pricing of risks.

Then, we will discuss the methods to manage market risk for fixed income and equity portfolios. You will learn about Value at Risk (VaR) and its applications to risk management practices.

Next, we introduce the concept of endogenous risks to demonstrate how financial risks originate within the financial system. We will also highlight behavioural aspects of risk and discuss important limitations of current risk management practices.

Finally, we turn to credit risk, with a focus on ratings based and structural models. We also cover credit risk on portfolios and credit derivatives. In the final lecture we will discuss the recent credit crisis and the ensuing regulatory responses and tie together the various parts of the course.

Session: Two
Dates: 8 July – 26 July 2019
Lecturers: Dr Georgy Chabakauri and Dr Cameron Peng


Programme details

Key facts

Level: 200 level. Read more information on levels in our FAQs

Fees:  Please see Fees and payments

Lectures: 36 hours 

Classes: 18 hours

Assessment*: Two written examinations

Typical credit**: 3-4 credits (US) 7.5 ECTS points (EU)

*Assessment is optional

**You will need to check with your home institution

For more information on exams and credit, read Teaching and assessment


Basic mathematics and statistics. Introductory Finance (to the level of FM250) or Introductory Microeconomics (to the level of EC101).

Programme structure

  • Foundations of risk measurement and risk finance theory
  • Basic risk management instruments: Forwards, futures, swaps and options
  • Market risk management: Methods for hedging risk in equity and fixed income portfolios; Delta and Gamma, Duration and Convexity
  • Value-at-Risk: Definition, implementation and evaluation of risk forecasts. Alternative risk measures
  • Credit risk: Merton model, the KMV approach, and ratings based models
  • Introduction to credit derivatives and mortgage-backed securities
  • Limitations and failures of risk models
  • Endogenous risk
  • Some ideas from behavioural finance: noise trader risk, limits to arbitrage, bubbles
  • The impact of the credit crisis and its implications for risk management and regulation

Course outcomes

  •  Learn the main tools and practices needed to assess and evaluate financial risks
  •  Understand risk management practices in an industry setting
  •  Gain the ability to critically assess risk management reports and research


LSE’s Department of Finance  enjoys a pre-eminent reputation for the excellence of their teaching and research, and for their leading role in public-policy issues. The Department of Finance has grown in recent years to become one of the largest and most highly-regarded finance groups in the UK and Europe.

LSE’s Department of Finance is closely associated with LSE’s Financial Markets Group and Systemic Risk Centre which regularly hosts a wide variety of seminars, conferences and public addresses by leading academics and practitioners. The Department, along with the Departments of Accounting and Management, was ranked as the UK leader for Business and Management Studies in the 2014 Research Excellence Framework. The Department’s excellence in research and world-class faculty set them apart as global leaders in the field of finance.

On this three-week intensive programme, you will engage with and learn from full-time lecturers from the LSE’s finance faculty.

Reading materials

J. Hull, Risk Management and Financial Institutions (4th Edition), Wiley, 2015.

*A more detailed reading list will be supplied prior to the start of the programme

**Course content, faculty and dates may be subject to change without prior notice

Start your online application

Enquire now

Enquire now

  • Please enter a valid email address. We will send you relevant material regarding the LSE Summer School programme.
  • Which course subject area(s) would you like to know more about?
  • Your privacy
    Your right to privacy is important to us. The personal information that you submit in this form will be used to provide you with information about LSE Summer School news that may be of interest to you. Please visit to read our Privacy Policy and learn more about how we collect and use information about you so that you can make an informed choice about using our website.

How to Apply

Related programmes

Summer Schools Advanced Corporate Finance (2019)

Short courses — Code(s) SS-FM350

Summer Schools Alternative Investments (2019)

Short courses — Code(s) SS-FM230

Summer Schools Analysis and Management of Financial Risk (2019)

Short courses — Code(s) SS-FM202

Summer Schools Finance (2019)

Short courses — Code(s) SS-FM250

Summer Schools Financial Markets (2019)

Short courses — Code(s) SS-FM255

Request a prospectus

  • Name
  • Address

Register your interest

  • Name

Speak to Admissions

Content to be supplied