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Managing financial risk

Managing financial risk explores the various financial risks that confront all institutions - credit risk, liquidity and refinancing risk, interest-rate risk, foreign exchange risk and operational risk. The module then examines how these risks can be both measured and managed. It uses many recent actual examples of risk management practices adopted in the public and private sectors - some good, some bad and some very ugly. By the end of the module you should have a full appreciation of how vulnerability to financial risks arises and how you, as a manager, can contribute to their effective management within your institution.

Vocational relevance

Managing financial risk will be of particular interest to you if you are working, or planning to work, in an organisation in the financial sector or in the finance division of a company or public sector/not-for-profit organisation.

The subject matter of the module is, though, pertinent to managers and prospective managers whose immediate responsibilities are outside the domain of finance. Given the growing catalogue of risk failures in all sectors - and the growing emphasis being place on effective risk management by all organisations - the content of this module will provide knowledge and skills that all effective managers should possess.

Qualifications

BB841 is an optional module in our:

Some postgraduate qualifications allow study to be chosen from other subject areas. We advise you to refer to the relevant qualification descriptions for information on the circumstances in which this module can count towards these qualifications because from time to time the structure and requirements may change.

Postgraduate Loans 

If you study this module as part of an eligible qualification, you may also be eligible for a Postgraduate Loan available from Student Finance England. For more information, see Fees and funding.

Excluded combinations

Sometimes you will not be able to count a module towards a qualification if you have already taken another module with similar content. To check any excluded combinations relating to this module, visit our excluded combination finder or check with an adviser before registering.

Module

Module code
BB841
Credits

Credits

  • Credits measure the student workload required for the successful completion of a module or qualification.
  • One credit represents about 10 hours of study over the duration of the course.
  • You are awarded credits after you have successfully completed a module.
  • For example, if you study a 60-credit module and successfully pass it, you will be awarded 60 credits.
15
Study level
Postgraduate
Study method
Distance learning
Find out more in Why the OU?
Module cost
See Module registration
Entry requirements

Find out more about entry requirements.

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What you will study

The global economy is still reeling from the effects of the 2008 financial crisis that witnessed the near-systemic collapse of the banking system - a crisis that was caused by flawed risk-management practices. Since 2008 the focus of governments, regulators and those running private and public sector organisations has been on how financial risk management practices can be improved to avoid a repetition of those events.

However, the 2008 crisis was not the first example of how risk management failings can bring down institutions - the collapse of Barings Bank, the Orange County financial fiasco and the losses made by local authorities in the UK in their investment activities are just a handful of recent examples from the last two decades of how risk management failings shake or even destroy institutions. These examples also highlight that risk management failings happen very regularly and occur in all sectors of the economy.

You will examine the financial risks faced by institutions, first by considering the nature of each risk and how exposure to that risk can be measured. This is important since management attention should focus on those financial risks that are both likely to arise and are potentially costly - perhaps fatal - to institutions. You will then explore how each risk can be managed by examining the various methods that can be employed to mitigate unwanted risk exposures. This includes looking at ‘hedging’ techniques and the role that can be played here by financial instruments.

You will explore the impact of ‘behavioural finance’ theory on the way that risk exposures are perceived and managed. BB841 also looks at the increasing interventionist approach to risk management - particularly within the financial services sector - being played by governments and regulators. The 2008 financial crisis taught a lot of institutions, regulators and governments a hard lesson in risk management failure with the result that currently huge resources are being devoted to avoiding a repeat.

This module is about more than financial theory. For each aspect of risk management you will look at real cases both failures and successes. You will also look at risk management across a number of institutions - since practices vary widely with some having a greater appetite for risk than others.

This module aims to:

  • provide you with an understanding of corporate finance, public sector/not-for-profit sector finance
  • enable you to understand financial risk management
  • examine and understand equity and debt finance - both the forms they take and the processes for raising such financings
  • explain credit risk, liquidity risk, credit risk, FX risk, interest rate risk, contingency risk and operational risk and to help you understand how these risks can be measured and managed.

It will enable you to:

  • understand how companies and public sector and ‘not-for-profit’ sector organisations can raise finance
  • understand the different features of financing instruments
  • undertake a ‘risk-mapping’ of a company or organisation
  • measure financial risks
  • understand how and why financial risks may be managed (including how derivatives and other financial instruments may be employed in such risk management)
  • understand the implications of IFRS for financial risk management.

Teaching and assessment

Support from your tutor

You will have a tutor who will help you with the study material and mark and comment on your assignments and whom you can ask for advice and guidance. You will contact your tutor by telephone, email or via your tutor group forum on the BB841 website.

Contact us if you want to know more about study with The Open University before you register.

Assessment

The assessment details can be found in the facts box above.

You must use the online eTMA system to submit your tutor-marked assignment (TMA) and end-of-module assessment (EMA).

Course work includes

1 Tutor-marked assignment (TMA)
End-of-module assessment
No residential school

Future availability

Managing financial risk starts twice a year – in May and November. This page describes the module that will start in November 2018 and May 2019. We expect it to start for the last time in November 2019.

Regulations

As a student of The Open University, you should be aware of the content of the academic regulations which are available on our Essential Documents website.

    Entry requirements

    You will need to have already completed MBA stage 1: management: perspectives and practice (B716). You should also have completed the compulsory Stage 2 modules The dynamics of strategy (BB835) and Corporate finance (BB831), although you may choose to study an elective module alongside this 15 credits of compulsory finance study.

    The module requires 150 hours of study over six months.

    You will also need an appropriate facility in English language, sufficient to be able to work effectively at postgraduate level; generally this means capability equivalent to an International English Language Test System (IELTS) score of 6.5. To assess your English language skills in relation to your proposed studies you can visit the IELTS website. If you are unsure whether your skill level in English is adequate you may find it helpful to look at our Skills for OU Study site.

    If you have any doubt about the suitability of the module, please speak to an adviser.

    Register

    Start End England fee Register
    03 Nov 2018 Apr 2019 £1450.00

    Registration closes 18/10/18 (places subject to availability)

    Register
    04 May 2019 Oct 2019 £1450.00

    Registration closes 18/04/19 (places subject to availability)

    Register
    This module is expected to start for the last time in November 2019.

    Future availability

    Managing financial risk starts twice a year – in May and November. This page describes the module that will start in November 2018 and May 2019. We expect it to start for the last time in November 2019.

    Additional costs

    Study costs

    There may be extra costs on top of the tuition fee, such as a laptop, travel to tutorials, set books and internet access.

    Study materials

    What's included

    An extensive variety of specially written resources presented in different media (print and online) and designed exclusively for this module, audio-visual material, published articles, case-studies, a set of interactive tools to help you develop your management thinking abilities and access to The Open University library.

    Computing requirements

    A computing device with a browser and broadband internet access is required for this module.  Any modern browser will be suitable for most computer activities. Functionality may be limited on mobile devices.

    Any additional software will be provided, or is generally freely available. However, some activities may have more specific requirements. For this reason, you will need to be able to install and run additional software on a device that meets the requirements below.

    A desktop or laptop computer with either:

    • Windows 7 or higher
    • macOS 10.7 or higher

    The screen of the device must have a resolution of at least 1024 pixels horizontally and 768 pixels vertically.

    To participate in our online-discussion area you will need both a microphone and speakers/headphones. 

    Our Skills for OU study website has further information including computing skills for study, computer security, acquiring a computer and Microsoft software offers for students. 

    If you have a disability

    Elements of this module are delivered online and include the use of real-time online discussions and an interactive whiteboard space; consequently time spent using a computer and the internet will be extensive. If you use assistive technology or have a hearing or speech impairment and have concerns about accessing this type of virtual environment and materials you can visit the system provider's website for information and contact The Open University to discuss it further before registering.

    Written transcripts of any audio components and Adobe Portable Document Format (PDF) versions of printed material are available. Some Adobe PDF components may not be available or fully accessible using a screen reader and mathematical and scientific materials may be particularly difficult to read in this way). Alternative formats of the study materials may be available in the future.

    If you have particular study requirements please tell us as soon as possible, as some of our support services may take several weeks to arrange. Find out more about our services for disabled students.