Derivatives and risk management

The global financial crisis has brought into sharp focus the need for sound risk management practices in all organisations including those in the public sector. This module will provide you with an understanding of the various financial risks faced by organisations and the ways in which those risks can be managed. The module will introduce key tools such as derivatives and risk mapping and also discuss the linkages of risk management with the organisational strategic plan. The module will also introduce enterprise risk management processes and the implications of International Financial Reporting Standards (IFRS) for financial risk management. 

Vocational relevance

Employment opportunities in the field of risk management are growing as a result of recent events. Derivatives and Risk Management 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, designed to be useful for managers and prospective managers whose immediate responsibilities are outside the domain of risk management. Given the growing catalogue of risk management failures in all sectors - and the growing emphasis being placed on effective risk management by all organisations - the content of this course will provide knowledge and skills that all effective managers should possess.


B862 is an optional module in our:

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 code


  • 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.
Study level
Across the UK, there are two parallel frameworks for higher education qualifications, the Framework for Higher Education Qualifications in England, Northern Ireland and Wales (FHEQ) and the Scottish Credit and Qualifications Framework (SCQF). These define a hierarchy of levels and describe the achievement expected at each level. The information provided shows how OU postgraduate modules correspond to these frameworks.
OU Postgraduate
Study method
Distance learning
Module cost
See Module registration
Entry requirements

Find out more about entry requirements.

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What you will study

The 2008 global financial crisis witnessed the near-systemic collapse of the banking system in many countries and significant resultant impact on non-financial firms - a crisis that was caused by flawed risk-management practices. Since then the focus of governments, regulators and those running private and public sector organisations has been on how risk management practices can be improved to avoid a repetition of those events. Derivatives, if properly used, can be a key element in reducing risk for many organisations. If improperly used however they can be what the famous American financier Warren Buffet called ‘weapons of mass destruction’.

You will examine the financial and non-financial risks faced by organisations, first by considering the nature of each risk and how exposure to that risk can be measured. This is important since management attention and risk management resources should focus on those risks that are both likely to arise and are potentially costly - perhaps fatal - to organisations. You will study various risk management techniques used to mitigate unwanted risk exposures. These methods include ‘hedging’ techniques and the use of derivatives.

You will explore the impact of behavioural finance theory on the way that risk exposures are perceived and managed. In addition to financial theory you will look at real cases encompassing both failures and successes in different aspects of risk management. You will also look at risk management across a number of organisations in both the private and public sectors since practices vary widely.

You will learn

This module aims to enable you to:

  • understand risk management 
  • examine and understand equity and debt finance - both the forms they take and the processes for raising them 
  • explain credit risk, liquidity risk, FX risk, interest rate risk, contingency risk and operational risk and help you understand how these risks can be measured and managed. 

The module will enable you to develop the following skills and abilities:

  • understand how companies and public sector and ‘not-for-profit’ sector organisations raise finance 
  • understand different features of financing instruments 
  • undertake a ‘risk-mapping’ of a company or organisation 
  • measure financial risks 
  • understand how and why financial risks can be managed (with a focus on how derivatives and other financial instruments may be employed) 
  • understand the implications of IFRS for financial risk management
  • appreciate the benefits of an integrated Enterprise Risk Management approach 

Teaching and assessment

Support from your tutor

Your tutor will help you with the study material, mark and comment on your assignments and provide advice and guidance. You will contact your tutor by email, telephone or via your tutor group forum on the module website.

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


The assessment details for this module can be found in the facts box above. You must use the online eTMA system to submit your tutor-marked assignments (TMAs).

Course work includes

2 Tutor-marked assignments (TMAs)
No residential school

Future availability

Derivatives and risk management starts once a year – in May. This page describes the module that will start in May 2023 when we expect it to start for the last time. A replacement module is planned for May 2024.


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

    Entry requirements

    All entrants must hold a BA/BSc degree awarded by a recognised university, or equivalent.

    Various higher education and professional qualifications are considered equivalent to a degree. If you hold a qualification that you believe is an equivalent level to a UK degree you should contact us. The Open University Business School Masters Programme Committee is responsible for judging whether applicants’ qualifications meet the requirements for admission.

    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 think either of these possibilities may apply to you, please speak to an adviser

    It is strongly recommended that you are comfortable with the use of numerical methods and use of spreadsheets. If you are unsure about these skills we suggest you familiarise yourself with illustrative numerical skills and methods prior to study. To help you decide whether you are ready, you may want to try this diagnostic quiz.

    If you have any doubt about the suitability of the course, please contact us


    Start End England fee Register
    06 May 2023 Oct 2023 £1690.00

    Registration closes 13/04/23 (places subject to availability)

    May 2023 is the final start date for this course. For more information, see Future availability.

    Future availability

    Derivatives and risk management starts once a year – in May. This page describes the module that will start in May 2023 when we expect it to start for the last time. A replacement module is planned for May 2024.

    Additional costs

    Study costs

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

    Ways to pay for this module

    We know there’s a lot to think about when choosing to study, not least how much it’s going to cost and how you can pay.

    That’s why we keep our fees as low as possible and offer a range of flexible payment and funding options, including a postgraduate loan, if you study this module as part of an eligible qualification. To find out more, see Fees and funding.

    Study materials

    What's included

    You will have access to a module website with an extensive variety of specially written resources presented in different media (print and online) and designed exclusively for this module. This includes:

    • audio and video content
    • case studies
    • published articles
    • a week-by-week study planner
    • online tutorial access
    • access to The Open University library.

    You will also be provided with a printed module book which is composed of CFA readings relevant to each unit of this module.

    Computing requirements

    You’ll need broadband internet access and a desktop or laptop computer with an up-to-date version of Windows (10 or 11), or macOS (11 'Big Sur' or higher).

    Any additional software will be provided or is generally freely available.

    To join in spoken conversations in tutorials, we recommend a wired headset (headphones/earphones with a built-in microphone).

    Our module websites comply with web standards, and any modern browser is suitable for most activities.

    Our OU Study mobile app will operate on all current, supported versions of Android and iOS. It’s not available on Kindle.

    It’s also possible to access some module materials on a mobile phone, tablet device or Chromebook. However, as you may be asked to install additional software or use certain applications, you’ll also require a desktop or laptop as described above.

    If you have a disability

    This module is delivered online and time spent using a computer and the internet will therefore be extensive. Written transcripts of any audio components are available, as are printable versions of the online text-based material. Some online material 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.

    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. Visit our Disability support website to find more about what we offer.