A postgraduate course in Business and Management.

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 course 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 course 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.

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This course is available for study in the countries shown. Fees and financial support may vary by country.

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 course 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 course 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

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 course 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 course will provide knowledge and skills that all effective managers should possess.

Entry

This course is an elective module in stage 2 of the MBA (F61). You will need to have already completed MBA stage 1: management: perspectives and practice (B716) and the compulsory stage 2 module Corporate finance (B831). You should also have completed or be currently studying the compulsory stage 2 module The dynamics of strategy (B835).

The course 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 course, please contact our Student Registration & Enquiry Service.

Qualifications

BB841 is an optional module in our:

• MBA (F61)

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.

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 our Student Registration & Enquiry Service before registering.

Regulations

As a student of The Open University, you should be aware of the content of the Module Regulations and the Student Regulations which are available on our Essential documents website.

If you have a disability

Elements of this course 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. Our Services for disabled students website has the latest information about availability.

Study materials

What's included

An extensive variety of specially written resources presented in different media (print and online) and designed exclusively for this course, 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

You will need a computer with internet access to study this course as it includes online activities, which you can access using a web browser.

• If you have purchased a new desktop or laptop computer since 2007 you should have no problems completing the online activities.
• If you’ve got a netbook, tablet or other mobile computing device check our Technical requirements section.
• If you use an Apple Mac you will need OS X 10.6 or later.

You can also visit the Technical requirements section for further computing information including the details of the support we provide.

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 our Student Registration & Enquiry Service 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).

Future availability

The details given here are for the course that starts in November 2013 and May 2014. We expect it to be available twice a year.

Students also studied

Students who studied this course also studied at some time:

• Managing 3: the integration challenge (B690)
• Managing 1: organisations and people (B628)

How to register

To register a place on this course return to the top of the page and use the Click to register button.

Distance learning

The Open University is the world’s leading provider of flexible, high quality distance learning. Unlike other universities we are not campus based. You will study in a flexible way that works for you whether you’re at home, at work or on the move. As an OU student you’ll be supported throughout your studies – your tutor or study adviser will guide and advise you, offer detailed feedback on your assignments, and help with any study issues. Tuition might be in face-to-face groups, via online tutorials, or by phone.

For more information about distance learning at the OU read Study explained.

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