Welcome to Module 4 of the course, Corporate Financial Decision-Making for Value Creation, where we will define, demonstrate, and then justify alternative approaches to risk management by modern corporations. So far in this course, we've dealt with three key decisions that senior financial managers face on a day to day basis. Firstly, we considered the internal investment decision, and how firms might optimally select projects for investment from the different proposals generated internally, within the firm. Next, we considered how firms might pay for that investment, and specifically, the role of IPOs, and the impact of debt on the returns required by and generated for shareholders. In our last module together, we considered the role of external investment by the market for mergers and acquisitions. This then transitioned to a discussion of the value benefits that could be achieved by unlocking the diversification discount by corporate restructuring. And now we shift our focus to the last of the big questions facing management. Should we manage the risk of the firms cash flows, and if so what instruments and markets are available to us? The motivation for this module is easily established by a quick flick through the annual report of any modern day corporation. For example, consider this excerpt from Kellogg's 2014 Annual Report, where the company clearly identifies different sources of risk to its cash flows and then identifies the different instruments that it uses to manage those risks. The structure of this module will be as follows. Firstly, we'll consider how corporations might manage risk by locking in prices using forward contracts for future execution, but highlight some of the dangers such contracts expose counterparties to, and how the development of futures markets addresses many of those shortcomings. Our focus will then shift toward the style of contract and that enables a hedger to reduce downside risk while keeping the upside of beneficial price movements alive with the discussion of the role of options contracts. We'll then survey the main drivers of the value of these contracts, highlighting the important role of volatility and option valuation. In our fourth session together we'll look at how different option contracts can be combined with positions in the underlying asset in such a way as to create payoff structures that match the risk appetite of the firm through the use of caps, floors and collars. Finally having developed a fairly comprehensive armory of alternative derivative securities, we'll answer the question how does risk management actually create value for our share holders? I have no doubt that you'll find this module both interesting and ultimately rewarding.