- Example #11. Chapter 19: Bank Capital Regulation and Enterprise Risk Management
- Example #12. Chapter 20: Legal Risk Post-SOX and the Subprime Fiasco
- Example #13. Chapter 23: Academic Research on Enterprise Risk Management
- Example #14. Chapter 10: How to Plan and Run a Risk Management Workshop; Chapter 22: Who Reads What Most Often?
Example #11. Chapter 19: Bank Capital Regulation and Enterprise Risk Management
TL: Economic capital is ...
Cover Exhibit 19.4 (page 344). This is reprinted as Exhibit 2.4 in this chapter.
LCT: Distinguish minimum capital requirements from economic capital.
Assess the impact of a "black swan" event on the expected loss and confidence level.
Appraise the effect of Asset Price Liquidity under a Panic, Exhibit 17.6 (page 312), on the expected loss.
Offer an economic outcome scenario that includes the black swan event and panic.
LN: This obviously refers to the subprime crisis (pages 89-90, 346, 351, 360- 361), economic crisis (page 32), and Troubled Asset Relief Program (TARP)
Exhibit 2.4 Economic Capital
Source: Robert L. Bums, "Economic Capital and the Assessment of Capital Adequacy," Supervisory Insights, Federal Deposit Insurance Corporation, Winter 2004.
(pages 11 and 303), along with related topics discussed elsewhere. The intent is to not repeat (cover) the knowledge, but rather to build on (use) the knowledge the students are likely to have already seen, if not experienced.
Example #12. Chapter 20: Legal Risk Post-SOX and the Subprime Fiasco
TL: Whistle-blower protection is ... (pages 357-358, 363).
LCT: Assume you find yourself in a position to be a whistle-blower.
Speculate as to the trade-offs involved if you're the whistle-blower.
LN: Google "whistle-blowers SOX." In other areas of ERM, students, especially working MBAs, may be able to provide examples of loss experiences, mitigation efforts, and risk management. To avoid overly personal discussion, whistle-blowing may be better approached by referring to publicly available information and examples.
Discussion of successful and unsuccessful whistle-blowing protection under SOX is very enlightening and productive, while avoiding overly personal disclosure.
Example #13. Chapter 23: Academic Research on Enterprise Risk Management
TL: The first article is ...; it found ... (pages 422-438).
LCT: Critique the article(s) your group was assigned.
Appraise the article(s) and survey findings.
Theorize about one or more of the findings.
LN: Reading the findings of the academic research is a recall, memorization, and possible comprehension learning activity. Creating a hypothesis or theory as to why growing firms, for example, are more likely to appoint a CRO (page 427) leads to an inductive learning discussion.
Example #14. Chapter 10: How to Plan and Run a Risk Management Workshop; Chapter 22: Who Reads What Most Often?
TL: Cover respective chapters without any link.
LCT: Review the findings on the use of consultants in Chapter 22 (page 394).
Imagine your group is an ERM consulting firm. Suggest techniques, approaches, and tools that could be used to respond to the survey results in Chapter 22.
LN: This is an example of one of many instances where topic coverage can be linked to further group discussion.