About this Website

This website is organized around a unique course we have designed on Advanced Corporate Financial Risk Management. At MIT this is Course 15.423, an elective corporate finance course offered at the Sloan School of Management. By putting materials for this course on-line, we hope to encourage a dialog with colleagues in industry, government and academia about the topics covered.

The current version of the lecture notes is available on the Table of Contents page. From there, users can also navigate to web pages specific to each chapter. On these pages you will find a short statement of the topics covered in the chapter, as well as a discussion of some topical items that tie to the chapter material. We hope to also add links to key resources relevant to each chapter.

There is also a related blog that contains short notes on very current topics and happenings.

Comments to the blog, as well as private correspondence, offer the opportunity for input from readers and colleagues in the field. The Lecture Notes and other items on this site are evolving dynamically. We welcome input.

About this Course

This is a course in Financial Risk Management. It explores the revolutionary advances in measuring, pricing and packaging financial risk that have reshaped finance over the last few decades. So the course touches on the usual suspects: hedging, futures, options, derivatives, risk-neutral pricing, value-at-risk, etc. But this is not a course in what we call the zoology of derivatives. The revolution that is risk management is about fundamental advances in the financial analysis of risk. These advances were originally inspired by models of derivatives, but their implications are much broader and deeper, and our focus is on these implications.

This is a course in Corporate Finance. It is not about financial companies. It is not about hedge funds. It is not about trading strategies and how to transform a small pile of money into a larger pile of money. It is about non-financial companies. These are companies that make products and deliver services. For these companies, finance is a support function. Financial analysis in general, and risk management in particular, is supposed to be a tool for making the company execute on its strategy more effectively. Each company’s specific line of business combined together with the specific problem at hand determines the right risk management analysis.

This is a course in Corporate Finance. It touches on all the familiar topic areas: capital budgeting, structuring the balance sheet, asset valuation, liability management, etc. We don’t treat risk management as one specialized compartment of corporate finance alongside these other. Instead, we show how knowledge of risk management ought to reshape analysis in each of these areas.