PRMIA Risk Management Challenge in London
FS Life / 16 February 2016
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Master of Finance Class of 2017
Tianxiao is a current Master of Finance student at Frankfurt School.

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Competition Introduction

The PRMIA Risk Management Challenge (PRMC) is an interesting case study competition held by the Professional Risk Managers’ International Association and it provides undergraduate and graduate students an opportunity to solve some up-to-date and real-world business problems with a risk management focus. This year was one of the largest with 117 teams, 443 competitors representing 45 schools. Our team, Frankfurt Elite, represents for the Frankfurt School with great honor. Our group is consisted of three girls, Yizhi, Tianxiao and Yihan.

Preliminary Case

Before the first case dissemination, our group held the first meeting. In this meeting, we set our goal to advance to the London Regional Challenge and we decided to read some materials regarding risk management to be fully prepared for the challenge. On Jan.4th, the first case – FX risk at EADS was disseminated and immediately, we started our work. In this case, the European Aeronautic Defense and Space Company N.V. (EADS), a leading global aerospace and defense company, was facing an elevate foreign exchange (FX) risk and our tasks, were to release this rising risk pressure and give some practical advice. We decided to take a MBA approach and did a very detailed analysis. After working days and nights, we finally finished our executive summary, EADS – at a risk management crossroads, in the morning of Jan.11th and all we could do was to wait for the result.
The preliminary result was announced after eleven days. At 22:30 on Jan.18th, we received an email started with the word “Congratulations” – we succeeded in advancing to the 2016 PRMIA London Regional Risk Management Challenge! Accompanied with this exciting news was busy preparations for the exciting London trip. At the same time, we were asked to do a deeper analysis of the same case with an additional question to be answered and to prepare for the slides to be presented in London.

Unforgettable Experience in London

London2Soon we arrived in the exciting and fantastic city London! Despite the lure of having fun in the city, Tianxiao still managed to stay in the hotel preparing for the presentation. One day before the competition we still faced some problems such as lack of presentation skills but much improvement was witnessed as we were practicing more and more times. Then came the competition day. Formal presentations were delivered separately in front of a group of judges and all teams were not allowed to watch any of the other teams’ presentations preceding their own. After all the presentations, judges determined one team to advance to the international championships. Judges were consisted of professors, experienced derivative traders and leaders of financial enterprises. There were seven groups representing six different universities attending the London regional risk management challenge. We were the fourth group to deliver. As a start, Yizhi introduced the background and statement of the problem. She analyzed the macroeconomic conditions and industrial environment at the time when the EADS group faced the FX risks along with the company analysis and introduced the main two approaches the company undertook. After the first part, Tianxiao presented the part of hedging tool and hedging accounting. She illustrated the hedging accounting regulation and the Speed Grid – a hedging tool created by the EADS group and explained why the EADS group were facing an increasing FX exposures. Lastly, Yihan displayed the part of counterparty risk management and practical recommendations. She made some action plans to the EADS group and demonstrated the reason to back up our recommendations.
The Q&A session was pretty challenging as we were asked to give recommendations in different scenarios as if EADS was our client. One of the judge was amazed at our English skills saying that we speak better English than most of his students in UCL. Afterwards we had a short networking session and had the chance to get to know competitors from the other schools. After the presentation delivered by the last team and final discussion session, the judges began to announce the result. The third price went to the Imperial College, the second price belonged to the Universita degli Studi di Napoli Federico II and the first price, as we were all happy to see, went to the Frankfurt School of Finance and Management! We were so delighted to hear that we earned the honor for our school and will go to Chicago!