Skip to 0 minutes and 13 secondsThis week, we've discussed why risk is such a central aspect of finance, we have seen how financial markets work, and we've examined the main types of financial securities. We have also studied the risks associated with the most common securities - bonds and stocks. Risk is very pervasive in finance. And indeed, one of the main purposes of finance is to transfer risks among investors. It is important that investors are aware of the different risks that they face, and of the main factors that can affect the value of their investment and that could potentially lead to large losses.

Skip to 0 minutes and 56 secondsWe have also seen why it is important that there is a diverse range of financial institutions in the economy which specialise in serving the needs of different categories of investors. Next week, we'll look at a number of methods that have been developed to manage risk and to reduce the possibility of losses from an investment. Crucially, we'll find that it is often possible to reduce risk without sacrificing the return on your investment. We look forward to exploring this with you next week.

Week 1: Closing thoughts

In this closing video, Prof Pasquale Scaramozzino gives a round up of the course and our examination of risk management so far.

He also previews next week’s learning, where we will look at the number of methods that have been developed to manage risk and to reduce the possibility of losses from an investment.

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This video is from the free online course:

Risk Management in the Global Economy

SOAS University of London