European Institute of Management and Finance | Financial Analysis for Risk Managers
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Financial Analysis for Risk Managers


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Course Overview


Everything these days is about Risk; identifying it, assessing it, mitigating and managing it. Organisations are exposed to risk, recognise their exposure and want to be safe. But you can never eliminate risk entirely, so you must effectively manage it. Risk Management is about balancing potential gains from perhaps ambitious strategies with the potential downsides if objectives are not met. This needs to be done professionally taking account of international standards and best practices.


Risk management is the process by which organisations methodically address the risks attaching to their activities in pursuit of organisational objectives and across the portfolio of all their activities. Effective risk management involves: risk assessment; risk evaluation; risk treatment; and risk reporting. The focus of good risk management is the identification and treatment of those risks in accordance with the organisation’s risk appetite.


An important element to this process is financial analysis which plays a critical role, as it can prove to be a vital source of information that can be used to input into the risk management process.



Training Objectives


By the end of the programme, participants will be able to:


  • Understand the mechanics of financial statements (balance sheet, income statement, and statement of cash flow).
  • Calculate profitability metrics and how to properly analyse them.
  • Understand the components of return on assets and return on equity.
  • Use key valuation metrics (P/E, EV/EBITDA, P/B, P/S, etc) to determine how cheap or expensive a stock is.
  • Navigate through financial statements.
  • Interpret and understand audit opinions.
  • Understand key earnings ratios including earnings-per-share (EPS).
  • Calculate activity and turnover ratios.
  • Understand the key ratios used to evaluate liquidity, solvency, and leverage.
  • Understand and calculate various key performance indicators.
  • Perform financial statement analysis.



Training Outline


Understanding the income statement account and statement of financial position

  • What is included in a statement of financial position?
  • What is included in an income statement account?
  • The differences between the above two financial statements.


Using information form the income statement account and statement of financial position in risk assessment process

  • How to interpret information from an income statement account and statement of financial position.
  • Ratio analysis as a risk metric
  • How to interpret using ratio analysis.
  • How to use selected ratios to interpret information in financial statements.
  • Key performance Indicators you need to know and use in risk measurement.
  • The limitations of ratio analysis.


Cash and the cash flow statement

  • Why cash is important in a business.
  • Timing of cash flows.
  • Importance of estimating likely cash flows pattern.
  • How to prepare a cash flow statement.


Monitoring and controlling cash flows

  • How to use the cash flow statement.
  • Importance of comparing budgeted and actual cash flows.
  • Why differences should be investigated.
  • Possible reasons for differences and subsequent actions that can be taken.


Cash flow and credit customers

  • The risks of giving credit to customers.
  • How to assess the creditworthiness of customers.
  • How to guard against non-payment by credit customers.
  • Strategies to deal with late payers


Valuation Ratios and Metrics

  • Introduction to valuation basics.
  • Residual earnings model.
  • Earnings management
  • The importance of audit opinions.


Seminar closing

  • Revision
  • Q&A
  • Feedback



Training Style


  • Illustration of key terms and concepts
  • Preparation and discussion of practical examples, including mini cases
  • The course will have both a theoretical and practical framework with real examples drawn from actual companies, local and international
  • Activities and Break-out groups



CPD Recognition


This programme may be approved for up to 7 CPD units in Accounting Standards. Eligibility criteria and CPD Units are verified directly by your association, regulator or other bodies which you hold membership.



Who Should Attend


The programme is ideal for individuals engaging in risk management or risk managers at any level that are engaged in business decision making or engage in any way to the financial of the organization and would like to acquire a basic overview of the topic.