Managing risk
Lesson details
Learning outcome
I can assess different types of financial risk.
Key learning points
- Financial risks can have both positive and negative outcomes.
- Different types of financial risk and reward can be assessed and compared.
- Failing to assess and manage risk may lead to serious consequences.
Keywords
Rate of interest - The rate of interest is the percentage by which an amount will increase.
Common misconception
A fixed interest rate is always better than a variable interest rate.
A fixed interest rate means you know what you will be paying but a variable rate means you might have paid less or more than the fixed rate.
Teacher tip
Pupils could investigate using rounded values in subsequent calculations to see the impact.
Content guidance
Depiction or discussion of sensitive content
Supervision
Adult supervision recommended
Licence
Lesson video
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Prior knowledge starter quiz
6 Questions
Q1.Jacob wants to save money. Which option should he pick?
Q2.Jun wants to borrow money. Which option should he pick?
Q3.I invest £50 000 into a variable savings account. In the first year the interest rate is 3%. How much money will I have after 1 year?
Q4.I invest £50 000 into a variable savings account. In the first year the interest rate is 3% and in the second year the interest rate is 4.7%. How much money will I have at the end of the 2 years?
Q5.I invest £50 000 into a variable savings account. In the first year, the interest rate is 3% and in the second year, the interest rate is 4.7%. How much interest was earned over the 2 years?
Q6.I invest £50 000 into a variable savings account. In the first year the interest rate is 3% and in the second year the interest rate is 4.7%. What is the overall percentage increase?
Assessment exit quiz
6 Questions
Q1.Lucas' parents are offered two options for borrowing money. Which option seems better for the first year?
Q2.Which of the following could be risks associated with choosing a fixed interest rate loan?
Q3.Laura's cousin borrows £75 000. Her loan has a variable interest rate which is initially 6.65%. What is the balance of her loan at the end of year?
Q4.Laura's cousin borrows £75 000. Her loan has a variable interest rate which is initially 6.65%. How much money has been added to the loan as interest?
Q5.Laura's cousin borrows £75 000. Her loan has a variable interest rate which is initially 6.65% but drops to 5.3% the following year. What is the balance of her loan at the end of the second year?
Q6.Laura's cousin borrows £75 000. Her loan has a variable interest rate which is initially 6.65% but drops to 5.3% the following year. How much money has been added to the loan as interest?
To help you plan your 10 financial education lesson on: Managing risk, download all teaching resources for free and adapt to suit your pupils' needs...
To help you plan your 10 financial education lesson on: Managing risk, download all teaching resources for free and adapt to suit your pupils' needs.
The starter quiz will activate and check your pupils' prior knowledge, with versions available both with and without answers in PDF format.
We use learning cycles to break down learning into key concepts or ideas linked to the learning outcome. Each learning cycle features explanations with checks for understanding and practice tasks with feedback. All of this is found in our slide decks, ready for you to download and edit. The practice tasks are also available as printable worksheets and some lessons have additional materials with extra material you might need for teaching the lesson.
The assessment exit quiz will test your pupils' understanding of the key learning points.
Our video is a tool for planning, showing how other teachers might teach the lesson, offering helpful tips, modelled explanations and inspiration for your own delivery in the classroom. Plus, you can set it as homework or revision for pupils and keep their learning on track by sharing an online pupil version of this lesson.
Explore more key stage 4 financial education lessons from the Making informed financial decisions unit, dive into the full secondary financial education curriculum, or learn more about lesson planning.