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Nilanjan Dey

Kolkata , Oct 29

XLRI, Jamshedpur, has tied up with the RiskMetrics Group of the US to add an international flavour to its latest initiative on risk management.

The New York-based RiskMetrics is billed as a leader in risk management. Its association with the business school is expected to boost the latter's efforts at addressing important issues related to market and credit risks. Included among these is value at risk (VaR), which is described as the new benchmark for measuring and managing risk.

"Major banks and FI from around the world use VaR to maximise profit opportunities and minimise risk. The issue has assumed greater importance with the adoption of the mandate of the Basel Committee on Banking Supervision, which stressed that banks adopt a more structured and comprehensive approach to market risk management," maintained Prof H K Pradhan of XLRI. The central bank in India has already issued certain guidelines to banks to adopt VaR models with a view to identifying risks in their portfolios, it is pointed out.

Financial Market Centre, a think-tank promoted by the management school, will organise a workshop on VaR in November along with RiskMetrics. The idea is to focus on the management of market and credit risks for banks, FIs and mutual funds. It is expected that the proposed workshop will help internationalise XLRI, ich intends to play a role, however small, in the emerging banking scenario.

"We intend to cover measurement techniques for various types of financial contracts and investment portfolios - fixed income, equity and foreign currency," noted Dr Pradhan (who heads the Financial Markets Centre), adding that the programme will benefit executives from banks and FIs, especially those who need to understand and report risk management operations.

The programme will also cover the Indian environment, particularly the RBI's guidelines on market and credit risk management. Its faculty will include a founding member of the RiskMetrics Group, Mr Alan J Laubsch, who was earlier a Vice President with J P Morgan's risk advisory group. Participants will be expected to deliver presentations on various risk related issues concerning their own organisations, followed by a survey of best practices.

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