UNIVERSITY OF ILLINOIS AT URBANA-CHAMPAIGN

College of Business
Department of Finance

Finance 580 ERM: CASES IN RISK MANAGEMENT

March 14 to May 2, Spring 2017

Section: E Tuesday and Thursday, 2:00 to 3:20 pm

2001 BIF

SYLLABUS

Instructor Information

Prof. Mark Vonnahme

Office Hours: by appointment
Cell: 630-770-3642
Email: mvonnahm@illinois.edu

Textbooks and Course Materials

There is no specific required textbook for this course. Case materials and articles on best
practices on risk management will be utilized throughout the course.

Recommended Text

Barton, Shenkir , Walker, 2002, Making Enterprise Risk Management Pay Off: How
Leading Companies Implement Risk Management (Prentice- Hall) BSW

We will be utilizing cases from a number of sources including Darden Publishing,

Harvard Business School Publishing, current cases in the news, guest speakers as well as
cases I have developed on a number of risk topics. Materials will be provided as needed
to support our class analyses and discussion. You will be responsible for purchasing the
required text and case materials. As needed instructions will be provided. As the
semester progresses our schedule may be adjusted based upon availability of the
executives that will provide both background and leadership on selective case studies in
risk management, insurance or other related financial topics. Announcements will be
made in class , via an email distribution list for the class as well as on our Compass site
for the class.

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Course Prerequisites and Background Materials

Students are expected to have completed FIN 520 or equivalent before enrolling in this
course. Students who have not completed FIN 521 will find themselves at a disadvantage
given that this course does not intend to teach corporate finance, but rather explore
applications via case discussion. An introductory course in risk management or enterprise
risk management would also be helpful.

It is my expectation that students in the course have a good knowledge of the material
covered in basic and advanced courses in Corporate Finance plus ACCY. We will be
introducing additional background material during the semester in the form of handouts.

Your textbook from FIN 520 or 521 will represent a useful reference source for
background reading. Recommended topical readings from a corporate finance or risk
management textbooks related to the cases discussed in each class can be found on the
course schedule in the last two pages of the syllabus. If you have any questions, please
feel free to check with me. Using a reference textbook is a very good practice of how you
will be working in your professional career.

Course Description

This course will provide perspective in managing risks a company faces in financial
decision making. This course helps students to bridge the gap between the theory of
finance, covered in other courses, and the reality of decision-making as a financial
manager through the use of risk management focused case studies. Students learn to
analyze real-world problems and provide recommendations to upper management of
potential and hopefully best course of action in a particular situation confronted by a
business. This is truly Applied Finance in action. Our focus will be on managing risks an
organization faces and applying risk management strategies to real business cases and
problems.

Course Objectives

The narrow objective of this course is to help students develop self-learning skills,
writing skills, as well as encourage teamwork. The greater objective is to prepare students
for making decisions within a business environment, a very valuable skill when you
begin your career in the business world. To achieve these objectives, the course will use
the case study method of teaching and learning. Case studies present real-world,
complex problems faced by financial managers that require analysis and use of judgment
to reach important business decisions. Our cases will focus on risk management strategies
companies use as part of their decision making in building stakeholder value.

The use of case studies is a very effective learning method because it emphasizes student
self-learning rather than a passive absorption of knowledge. Students learn to develop
critical thinking skills and use their judgment to make decisions. Case studies do not

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always lead to the right or the one course of action for the decision maker. Rather,
decisions are justified based upon sound financial assumptions and a thorough analysis of
the situation at hand. Therefore, the analysis and discussion of cases is very valuable
because it teaches students how to use principles of finance to define and analyze
problems, work as a member of a team, and make recommendations for the best course of
action.

Class Format

Case courses have a very different class format from other courses that you have taken
thus far in your studies. In other courses, students are engaged in a passive form of
learning and are expected to learn and practice skills through homework and exams.
Courses that utilize the case study method assume an active form of learning on the
part of students. The following four principles are ESSENTIAL components of each
students success in a case course:

Participation: Learning in a case course takes place primarily through active

class participation. Students are strongly encouraged and are responsible for
sharing their understanding and views on each case with the rest of the class. As
you can tell from the grade composition, class participation is very important
and comprises half of your course grade.
Preparation: To effectively participate in class discussion of cases, students
MUST come to class well prepared. Students should study each assigned case in
advance, identify the main participants and the problem faced, and prepare to ask
and answer questions. It is very important that you work to analyze the case
before it is discussed in class. You must be prepared to offer your judgment and
recommendation for the situation presented in each case. You should feel free to
visit me during office hours or set up an appointment, if you need help with
preparing for a case. In addition, you should read all assigned background
readings. Again, I emphasize that students must prepare well before arriving to
class.
Presence: The only way to learn and succeed in this course is to be present and
participate in each and every class. Reading a text or copying notes from your
fellow students CANNOT substitute for the insight and knowledge that you will
acquire through participation in class discussions.
Promptness: Students must make sure that they arrive before the beginning of
each class. Students who arrive to class late disrupt the discussion and impose a
burden on their fellow students learning experience. If, for some reason, you
happen to arrive to class late, please enter quietly and do not disturb your fellow
students.

It is clear from the above that students must make a commitment to prepare for each
class and actively participate in class discussions. This point cannot be emphasized
enough! Students must also be prepared to be called upon to answer questions or offer

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their views on the case under discussion. I also strongly encourage you to take a stand
and offer your recommendation for action by management based upon your analysis.
Remember, case studies describe real-world business situations. There is typically more
than one course of action that can be taken. It is not important to discover which
particular action will eventually be taken as it is to learn to provide a recommendation
based on financial principles and solid analysis.

Grading Procedures and Policies

Course Grade: The course grade will be determined by your class participation,
case briefs, a case presentation and a final exam. The grade composition is as
follows:

Class Participation/Case Brief Summaries 40%

Case Research and Presentation 30%
Final Exam 30%

Final examination: The final case examination will comprise 30% of your total
grade. The examination will be on an individual basis. The required deliverable will
be a case analysis and short final exam during the normal final exam time scheduled.
More details on the final will be provided by the instructor.

Participation grades: The quality of your class participation will be graded each
day on a scale of zero to three points. Participation grades will be based on the
following criteria:

o 0 points: No participation or observations

o 1 point: Contributes relevant information or facts, asks critical questions
concerning the discussion in class, reading assignments and responses to
comments of classmates
o 2 points: Provides an interpretation of relevant information and/or facts
that is based on analysis and, in turn, advances the discussion to other
related topics
o 3 points: Provides contributions that leads the discussion to a
significantly higher level of thought; or presents an analysis and
interpretation of the relevant information that results in a solution to the
case

You are encouraged to work independently in preparing the case. However, it will
be very helpful to form a study group or work with your team in order to discuss
your analysis and interpretation of each case, which will help you to more
effectively prepare for class.

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 There will be individual and team based Case Brief Summaries required on
selective cases throughout the course. These summaries are expected to be two to
three pages in length. The format to be covered will include: A Description of the
Issues, the Analytics required and undertaken in evaluating the case, and a
Recommendation for Action. All cases will deal with various risk firms face
every day.

Students will also be expected to be ready to facilitate the discussion of at least

one case during the semester. This will be a cold call on the day of class. The
expectation is all students are ready for discussion in each class. Students may
pass once on this requirement.

Each student is permitted to have NO MORE THAN TWO excused absences

throughout the semester. Please notify me of your absence before the specific
date either in person or by email. All students will be required to prepare a
two page Executive Summary on the case discussed during any excused or
unexcused absence. The report will be due at the next class session.

Case Presentation: Teams of two to three students will be asked to present one
of the cases listed on the syllabus or another case agreed upon with the Professor.
The purpose of this presentation is to enable you to practice your presentation
skills. This presentation should be treated as taking place in front of the firms
board of directors (or senior management). You will be asked to present one of the
cases covered during the period April 4 to May 2. Those of you not presenting on
a specific day will play the role of a member of the board of directors (or senior
manager) and are expected to participate through questions and during the case
discussion. Thus, your participation in those discussions will be graded as in any
other class.

Teams must select the case that they would like to present by the March 29 class.
More information on the selection process will be provided later. Teams will
prepare their presentations in consultation with me. I will provide guidelines and
suggestions to help you with the preparation of your presentation.

Cases in the News: We will allow time every Thursday for individuals and teams
to discuss cases in the news and how they either manage or mis-manage the risks
of their business.

Academic Integrity

Violations of academic integrity as given in the Code of Policies and Regulations will be
taken extremely seriously, and students found cheating in the course (or helping others

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 to cheat) will be penalized according to the Codes guidelines. From the University
statement on your obligation to maintain academic integrity:

If you engage in an act of academic dishonesty, you become liable to

severe disciplinary action. Such acts include cheating; falsification or
invention of any information or citation in an academic endeavor; helping
or attempting to help others commit academic infractions; plagiarism;
offering bribes, favors or threats; academic interference; computer-
related infractions; and failure to comply with such regulations

Rule 33 of the Code of Policies and Regulations Applying to All Students gives complete
details of rules governing academic integrity for all students. Students are responsible for
knowing and abiding by these rules. Students Conduct Code pertaining to Academic
Integrity and Procedure http://admin.illinois.edu/fairdocumentation/FAIR

Disability Accommodation

To ensure that disability-related concerns are properly addressed from the beginning,
students with disabilities who require reasonable accommodations to participate in this
class are asked to see me as soon as possible.

BIF Emergency Procedures/College of Business Emergency Procedures

Because BIF is not a designed tornado shelter, in the event of a tornado warning please
seek shelter in the Wohlers Hall basement or the Armory (the nearest designated
University tornado shelters). If a tornado is imminent, the BIF basement stairwells can be
used on an emergency basis. In the event of a fire in BIF, exit BIF and proceed to 141
Wohlers Hall. In the event of threat from a shooter on campus, we will lock down the
classroom and move to a place of safety within the classroom. If you/we encounter a
suspicious package, do not touch the package, alert campus security and refrain from cell
phone usage until the situation is resolved. More detailed information and action
instructions are available in the BIF Building Emergency Action Plan.

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Class Schedule/Topics

The following represents a schedule of classes and topics. Adjustments may be made
based upon speaker availability and other potential considerations. Announcements
of any changes will be provided via class, email and our Compass site.

Date Topic/Case Materials

March 14 Course Introduction

Getting Started/Lessons Learned PowerPoint

March 16 Lessons Learned /Cases in the News PowerPoint

Warren Buffett Darden

SPRING BREAK

March 28 Krispy Kreme Darden

March 30 Cases in the News

April 4 Butler Lumber Harvard

April 6 Bumble Bee Seafoods Darden

April 11 Fighting Illini Const.- Guest Case Provided

April 13 Deluxe Corp Darden

April 18 Horniman Horticulture Darden

April 20 TBA

April 25 Guest Speakers and Case Provided

April 27 AIG: The Financial Crisis Darden

May 2 Enron/Tyco: RM failures?

Other failures in risk management

May 10 Final Exam- 7:00pm 2001 BIF