The most common instruments used to hedge against market risk are options. Futures, forward contracts and hedging are also used to mitigate the impact of market volatility. For more details about options, visit the derivatives section of this site.
Derivatives play a very important role in risk management.
Derivatives can be thought of as insurance for stocks, commodities or other instruments. Derivatives not only have use in the financial sector, but are relevant to a vast number of businesses. Take for instance a transport company that ships cargo across North America by truck. This company would likely use gasoline as an input into their services. If the manager of this company were to become worried about rising fuel prices, they could enter into a futures contract to buy a certain number of barrels of gasoline at a set price for delivery at a set date in the future.