Management and Regulation of Risk

This information is for the 2021/22 session.

Teacher responsible

Dr Jon Danielsson and Dr Ansgar Walther


This course is compulsory on the MSc in Risk and Finance. This course is not available as an outside option.

Course content

This course is designed to expose students to the breadth of risk management thinking and approaches across different areas. The course material is divided into the following areas:


Section A. Risk and Regulation - Introduction and Overview: Sets out the problem of risk management and regulation. It formulates a general conceptual framework that can be used in devising solutions to risk either as a management problem or as a regulatory problem, or both.

Section B. Financial Market and Regulation - Discusses the role of regulation in the financial sector, bank competition and moral hazard; distinguishes prudential regulation of banks and the regulation of insurance and pensions; the tools of microprudential regulation; the challenges of assessment of systemic risk and macroprudential regulation.

Section C. Financial Risk Analysis - Examines issues in financial risk including risk and regulation in the insurance markets; tools of financial risk management, including diversification, hedging and capital provisions; risk measurement for financial instruments (market risk, value at risk); credit risk, ratings and credit derivatives; operational and business risk.

Section D: Strategy, Control and Risk in Organisations - Provides a strategic management perspective on risk analysis and management, including an examination of strategic visioning. Also considers: issues of enforced self-regulation as a method of risk management with reference to occupational health and safety regulation; risk management and decision making in organisations; enterprise-wide risk management and auditing.

Section E: Risk Analysis and the Psychology of Risk Bearing - Explores the meaning of risk as perceived by different agents; methods of dealing with risky situations; analysis of risk taking by groups, behavioural analysis of financial risk taking.

Section F: Possible Specific areas of risk analysis - 1) Liquidity and operation risks in exchanges; 2) Counter-party risks in the OTC markets, potential triggers for market failure; 3) Legal analysis of risk, conditions when legal risk exists and how it can be mitigated, legal tools to influence conduct.


60 hours of seminars in the MT.

Formative coursework

Students will be given weekly problem set assignments.

Indicative reading

J. Hull, Risk Management and Financial Institutions. 2nd Edition.; S Dawson, Analysing Organisations (Macmillan, 1996); S French, Readings in Decision Analysis (Chapman and Hall, 1989); C Hood & D K Jones, Accident and Design (UCL Press, 1996); Jorion Value At Risk to 3rd Edition 2007 (McGraw Hill); M.Power. Organized Uncertainty: Designing a World of Risk Management (Oxford University Press, 2007); M.Fenton-O'Creevy, N.Nicholson, E.Soane and P. Willman, Traders: Risks, Decsions, and Management in Financial Markets (Oxford University Press, 2005); B A Turner & N F Pidgeon, Man-made Disasters (Butterworth-Heinemann, 1997). The Economics of Climate Change: The Stern Review (Cambridge University Press, 2007).


Continuous assessment (100%) in the MT.

A substantial (10,000 word essay, due in August) is an integral part of the course and represents 50% of the assessment. 

Course selection videos

Some departments have produced short videos to introduce their courses. Please refer to the course selection videos index page for further information.

Important information in response to COVID-19

Please note that during 2021/22 academic year some variation to teaching and learning activities may be required to respond to changes in public health advice and/or to account for the differing needs of students in attendance on campus and those who might be studying online. For example, this may involve changes to the mode of teaching delivery and/or the format or weighting of assessments. Changes will only be made if required and students will be notified about any changes to teaching or assessment plans at the earliest opportunity.

Key facts

Department: Finance

Total students 2020/21: 69

Average class size 2020/21: 72

Controlled access 2020/21: Yes

Value: One Unit

Guidelines for interpreting course guide information

Personal development skills

  • Problem solving
  • Communication
  • Application of numeracy skills
  • Commercial awareness
  • Specialist skills