December

Financial Risk Management Symposium Aligns with Business Research Center Launch

News Story: December 20, 2016

Sacred Heart University recently spotlighted select students pursuing doctorates in business administration in finance, who showed their dissertation work and conducted a financial risk management symposium.

The event coincided with a celebration for the launch of SHU’s new Center for Applied Business Research (CABR).

Applied business research students gave visitors a look at their dissertation work, presented as posters on easels outside the Forum meeting room in the Frank and Marisa Martire Business & Communications Center. “These pertain to different aspects of finance, including liquidity risk, stability of financial and derivative markets, and analysis of banking efficiency and performance,” explained Lucjan Orlowski, professor and director of SHU’s DBA program in finance, who was overseeing the event.

Among the student presenters was Monika Sywak, who focused on “The Interplay Between Commodity Future Prices and Exchange Rates.” Sywak explained that she was exploring the relationship between oil prices and the U.S. dollar exchange rates in normal periods and during turbulent times.

Another DBA candidate, Matt Roessler, presented “Commodity Effects on Equity Returns: An Analysis of Natural Rubber and WTI on Selected Tire Manufacturers’ Stock Returns.” Roessler noted, “I wanted to see if there’s any influence of natural rubber on equity markets, and I found that U.S.-based manufacturers tend to use synthetic rubber, while Asian-based companies rely more heavily on natural rubber. So, if someone wanted to make money, they can say if there’s a return on natural rubber, there might be a similar return from Asian tire manufacturers, and it would be a good time to buy.”

Roessler said SHU’s Applied Business Research program is very methodical and has prepared him well. “In the first year, there’s a lot of definition of terms and learning the system of analyzing data,” he said. “The second year is an expansion, with much more in-depth analysis. My game plan is to continue in the private sector as a manufacturing analyst.”

The new CABR will offer greater resources and collaboration opportunities for students and faculty, according to Orlowski. “We will be working closely with doctoral faculty and students on sponsored research projects and also organizing seminars of interest to our research endeavors, mainly in the departments of economics and finance,” he said.

The afternoon symposium followed that goal, noted Mark Ritter, executive-in-residence at the Jack Welch College of Business (WCOB) and director of the CABR. “The objective was to bring together market practitioners and acknowledged specialists in their field, and bridge the gap between theoretical finance and applied finance, to present the practical side of risk,” he said.

John Chalykoff, dean of the WCOB, commented in his opening remarks for the symposium, “Nothing has gained more prominence than risk management. It’s now becoming a discipline in academia.”

Symposium speakers included keynote Erik Norland, senior economist at CME Group; and panelists Kevin M. Hanrahan, TranSigma CEO, for an operational view; Peter Aerni of Bank of America, on market & credit risk; Rebecca Simmons of Sullivan and Cromwell, covering the legal perspective; and Michael Borom of Thomas H. Lee Partners, on risk with private equity.

Norland’s opening related to analysis of the economy and repercussions of a Trump presidency, about which Orlowski had expressed, “I am personally cautiously optimistic. Some aspects are correct, like tax cuts, but if too deep, they could lead to a higher deficit, higher public debt and higher interest rates. I hope he will not implement protectionism, as that could be dangerous to economic stability.”

From left are Lucjan Orlowski, Mark Ritter
and speaker Erik Norland. 

Norland shared, “We saw an enormous market move the night of the election, with prices going up and yields going down. Currency was affected, too, like the Mexican peso and other emerging market currencies.” He said fluctuation had been created across various industries, with financial and healthcare markets being “gainers” and utilities and technology being “losers.” He cautioned, “Investors need to hedge themselves through various instruments.”

Speaking to Orlowski’s protectionism comment, Norland said, “Trump has a protectionist inclination, and likely stronger dollars will increase the likelihood of trade wars, but that shouldn’t tip us into a recession.” Regarding interest rates, Norland said that if the Federal Reserve raises them too quickly, the country might face a recession in 2019-2020. On a related note, Norland said Trump may replace the Federal Reserve chairman, which could create market volatility.

Norland also spoke about “Brexit,”—Great Britain’s separation from the European Union—which he called, “a shock that is still very much with us.” He said it has made the euro unstable and may result in British currency declining even further than it already has, again affecting world markets.

Debt was another of Norland’s concerns. Public and private sector debt has been increasing globally, with a number of countries having 250 percent total-debt-to-GDP, which creates volatility.