Share / Print

Capstone Projects

The Risk Management Strategic Capstone is a team based project presented at the culmination of the program. It requires students to build on their own professional experience and exposure to the academic content of the program to create a meaningful project that demonstrates their ability to take an integrated, enterprise-wide view of risk management.

Past MSRM Strategic Capstone Projects


MSRM Students Joined Forces to Develop a Robust Risk Framework for Funds Investing in Africa.

MSRM Group Image

How do you put together a high-powered team, with members from different companies, who have complementary expertise and can blue-sky an innovative plan designed to boost Africa’s emerging economy? A group of seven students in NYU Stern’sMaster’s in Risk Management (MSRM) program joined forces to develop the plan for their capstone project.

The group members spanned multiple countries and time zones and averaged about 15 years of multinational work experience in risk management, corporate and investment banking, corporate finance, financial and industry consulting, and compliance: Aliyu Ahmed, a Bank of America assistant vice-president from Nigeria, based in Los Angeles; Eneni Oduwole, a veteran risk management executive from Nigeria; Gerald Mudzamiri, a Zimbabwean working in Toronto and Dubai as an independent consultant in business transformation and risk management; William Adjovu, a Ghanaian native who is currently CEO of the Liberty Group of Companies in Ghana; Omoatama Isenalumhe, a Nigerian operations and compliance manager based in New York; Mokgadi Magoro, a South African treasury analyst responsible for asset and liability management at the Barclays Africa Group in Johannesburg; and Augustine Emeka Uzoh, a Nigerian credit risk manager with Diamond Bank plc in Nigeria.

Aliyu persuaded the team to pursue a project on sovereign wealth funds (SWF) that would work for African countries. Gerald explains, “It was easy for us to believe in this project because we had a common heritage and experience of the African continent. Our confidence in pursuing it despite all odds stemmed from the fact that we had varied and rich careers, work experiences and contacts.”

Indeed, the group’s deep experience and professional networks enabled them to work at a level that added legitimacy and dimension to their result. “We took stock of those amongst us who had contacts with senior people in government, organizations of interest and relevant SWF institutions globally,” says Aliyu. An added benefit, he adds, was the expansion of the members’ contact lists: “The horizon of our professional network has expanded both in breadth and depth.”

The team divided up tasks based on areas of expertise and access to information, and the entire project was organized into three phases. Included were a rationale for SWFs and review of existing best global practices, a survey of the regulatory and legal landscape, and an intensive investigation into the applicability of the SWF framework in Africa. MSRM faculty assigned NYU Economics Professor Yaw Nyarko, a leading Ghanaian economist, to provide feedback along the way.

Given the continent’s challenges with recursive and unstable growth, the team undertook a deliberate review of the counterproductive factors that have impeded Africa’s progress, including poor infrastructure and outdated technology, corruption and poor governance, lingering civil disturbances, a weak educational system and a dearth of skilled professionals. “Given this complex outlook, it is crucial that a fit-for-purpose framework is developed and implemented by African countries to ensure that issues of strong governance and effective risk management are adequately addressed and processes required clearly defined,” says William.

Eneni describes, “Our recommended governance structure has very useful tenets that can be adopted by SWFs in Africa. It recommends a three-tiered oversight, evaluation, monitoring and reporting cycle across the three key stakeholders of a typical SWF – namely the Ministry of Finance, the Legislature and the Central Bank. The adoption of this model is critical in Africa because of the level of corruption and project disruption. As a result, we intend to share our approach with stakeholders in academia, government and SWFs, especially in Africa and similar developing countries.”

Emeka expresses the group’s cautiously bullish outlook: “We are positive that the gains accruable from Africa’s immeasurable natural resources can be plowed back into the development and growth of socioeconomic structures of these countries, if an appropriate and well-managed savings and investment system such as an SWF exists,” he says. For this talented group, that would be a dream come true.

Additional Student Capstone Projects

MSRM Students See a More Resilient Future for Brazil

MSRM Students See a More Resilient Future for Brazil
By Anna Christensen

MSRM Brazil Group

“Brazil has experienced many ups and downs in its economic history,” noted Rodrigo Figueroa, a student in NYU Stern’s MS in Risk Management program. “Our team wanted to examine the data rigorously to determine the country’s resiliency to shocks.” A key component of the MSRM program is the strategic capstone project. Students tie together the substantive content and practical case work taught throughout the year in a concrete risk analysis presented at the culmination of the program. Rodrigo was a member of a capstone team seeking to determine Brazil’s capacity to service its external debt in the event of changes in the global economic environment. He worked with teammates Caio Banti, Angelica Sakurada, Enrico Sanches, Ignacio Saralegui, and Daniel Vieira, all of whom have ties to Brazil.

Brazil has defaulted five times in its history, twice in the 20th century. The country appeared to be on an upward trajectory during a period of debt-fueled economic growth in the 1970s but suffered a severe financial crisis after the second oil shock in 1979, leading to the country’s most recent default, in 1983, and a “lost decade” of hyperinflation and successive crises. The students wanted to determine if the country was destined for a similar fate again or if the economic trajectory was more stable this time.

“We were able to pull a great deal of data from the IMF, World Bank, and Central Bank of Brazil to use in our risk analysis,” reported Ignacio. The team also drew from Stern’s resources. “Our project mentor and advisor, Professor Thomas Pugel, challenged us to get the right data and identify key risk indicators, and Professor Ingo Walter taught a framework in his class that was exactly what we needed to structure our project,” recalled Rodrigo. “Once we had our data, we used a scenario analysis technique to test how Brazil would fare in a wide variety of economic situations.”

The students’ comprehensive research indicated that Brazil is “significantly more resilient” than in the past, and therefore equipped to sustain sizeable external shocks without falling back into default within the next five years. Rodrigo noted, “We wanted to have something useful and tangible for anyone with investments or interest in investments in Brazil.” So far, the students have seen initial interest in the report from several parties. Daniel said, “We recently spoke to the CEO of a global risk management services firm, and he was very interested in our report because he gets these specific questions from investors.”

According to Ignacio, “The capstone project’s greatest value is that it allowed us to apply what we learned in class to something that was functional in the real world.” Another aspect of the project that was particularly rewarding for the team was the optimistic analysis: “As a Brazilian, I was delighted to reach a positive conclusion with so much certainty,” said Daniel. Angelica added: “Most of us in the group grew up in a time that was very tough economically in Brazil. It’s great that we can see through our analysis how much more resilient the external accounts are doing now.”

Could Stress Testing Transparency Avoid the “Next Black Swan”?

Could Stress Testing Transparency Avoid the “Next Black Swan”? And, given the cost, is it worth it?

MSRMCapstoneGroupPhoto2

One question on the forefront of every Financial Risk Manager's mind is: What will the next crisis be, and how can I help inoculate my firm against this risk?

To avoid such catastrophic events as have been seen in the recent past, regulators globally are both mandating banks to increase the rigor in their stress and also assuming the responsibility of defining the stress testing processes including continual communications, limitations, design and disclosing results directly to the larger public. The intent of such disclosure is to harmonize internal stress testing approaches, encourage banking practices accountability, reduce systemic risk and resolve system-wide market failures.

But do these stress testing disclosure measures lead to any stronger risk mitigation?

Venetia Woo, Wilfrid Xoual, Bharat Chelluboina, Jos Heuvelman and Vincent Lucanie, global risk executives from the Class of 2013 evaluated this question in their capstone project - a group project that works as a practical application of the curriculum taught throughout the year and presented at the culmination of the program.

Over the year-long project, the team conducted both a qualitative and quantitative analysis including in-depth literature review, interviews with regulators, analyst and senior executives from banks and an extensive analysis on the market returns related to the disclosures results. In conjunction with their research, “Input from our classmates, professors and Capstone advisers proved to be an extremely valuable resource to the success of our project,” Vincent shares.

Ultimately, their research illustrated that transparency in stress testing leads to improvements in systemic risk and measurable effects of market discipline. Their Capstone culminated with recommendations to regulators in defining the stress testing and disclosure standards, industry analysts in how to intake and evaluate the disclosure results and financial institutions on how to improve their internal risk frameworks. Wilfrid Xoual shares his insights on the capstone results. “The financial crisis made clear that Tax Payers could not be seen as the solution of last resort for failing financial institutions anymore. Our project, although in a very limited way, showed that it could be beneficial to provide a better visibility on risks taken by banks, and therefore allow for an earlier and cheaper solution shaping in case of problems, potentially protecting all us from the “Too big to fail” syndrome.”

The team's experience with the capstone project and overall program has impacted them both professionally and personally. Bharat shares "The MSRM program couldn't have been at a better time for me. It provided me with valuable resources and understanding which helped me effectively implement some key regulatory programs at RBS.”

Currently, their findings are in the process of academic publications and have been a source of reference in their everyday executive roles. Furthermore, the global risk community and advantages as Stern alumni continue to benefit students much further than the program. Vincent Lucanie shares, “As a Managing Director in a risk area, I have used both my academic and global classmate network in the day-to-day execution of my responsibilities. When a systemic risk issue arises, it has been invaluable network for me to reach out to bring these unique perspectives back to the workplace. The MSRM program is a perfect example of the type of training senior managers need to ensure their business is meeting this objective while remaining profit focused but not just profit centered.” Also, Venetia Woo notes, “The Capstone project is immensely relevant, several fellow alumni have contacted me on CCAR and stress testing as new regulatory requirements emerge for their institutions.”

Published Student Capstone Projects

High Frequency Trading and US Stock Market Microstructure: A Study of Interactions between Complexities, Risks and Strategies Residing in U.S. Equity Market Microstructure

MSRM Students Class of 2013, Samir Abrol, Benjamin Chesir and Nikhil Mehta

Read the entire paper here.

Future Regulation of Hedge Funds—A Systemic Risk Perspective

MSRM Class of 2010 students Wouter Van Eechoud, Wybe Hamersma, Arnd Sieling, David Young

Van Eechoud, W., Hamersma, W., Sieling, A. and Young, D. (2010), Future Regulation of Hedge Funds—A Systemic Risk Perspective. Financial Markets, Institutions & Instruments, 19: 269-353. doi: 10.1111/j.1468-0416.2010.00160.x

Read the publication here.

Qualitative and Quantitative Risk Management in Emerging Markets

MSRM Students Class of 2011, Konstantin Makarov and Raymond Mui

Read QQRM: Qualitative and Quantitative Risk Management in Emerging Markets here.

Strategic Mortgage Default in Financial Institutions: A Proposal for an Alternative Management

MSRM Students Class of 2012, Jonathan Franco, Melodie Anne Juson, Diederick Koolmees, Cynthia Liwanag, Jeffrey Cherry

Read the entire paper here.