Identifying, mitigating, and managing risks is a core component of running a successful business. More so in the current volatile business environment. Businesses keen to lower their risk exposure resort to hiring risk managers, making risk management one of the most in-demand careers today.
Risk management careers are highly lucrative and cut across all business verticals in the public and private sectors. These jobs entail developing and implementing strategies to lower the impact of these risks on the business.
Buckle up as we detail how to pursue a career in risk management and join one of the fastest-growing professions in the world.
What Does a Risk Management Career Involve?
A career in risk management revolves around identifying the obstacles that may stand between a company and its business goals. Your job is to identify and help the firm’s management mitigate and minimize the impact of these risks if they occur. Risk managers work closely with business owners or senior executives to identify, assess, measure, mitigate, and monitor risks.
The role and duties of a risk manager vary between organizations. Some roles carry oversight duties, while others require financial management skills and various leadership skills. In manufacturing, a risk manager may implement a preventive maintenance program. They’re often charged with identifying possible compliance risks in heavily regulated sectors such as healthcare.
Types of Risk Management
Risk managers deal with various types of risk spread across various categories. Typically, a company’s risk exposure ties closely to its business type. Some of the common types of risk exposure you’re likely to encounter in your career include:
- Strategic risks: Changes in the marketplace, such as new technology, new competitors, or changing consumer habits, pose a strategic business risk. Managing this type of risk entails monitoring the market for signs that may require a shift in business strategy.
- Legal risks: Companies face the risk of lawsuits from competitors, customers, or the government. Risk managers anticipate these risks by identifying vulnerabilities and implementing practices or policies that lower litigation chances.
- Operational risks: operational risks involve a disruption of a company’s operations. They may result from a mechanical breakdown, data breach, or the departure of key personnel. Risk managers identify vulnerabilities in a company’s operations and create action plans for a quick and effective response.
- Reputational risks: A change in how the public or customers perceive a business can negatively impact its operations. Reputational risks may stem from product failure, unpopular public stances, or executive misbehavior. Professional risk managers identify potential risks and create programs to help companies safeguard their reputation.
- Regulatory risks: Companies are subject to state and federal regulations in their respective industries. Regulatory changes can increase a company’s overhead and depress its bottom line. Regulatory risk managers use their sound knowledge to help companies build practices and policies that comply with these regulations. They also anticipate regulatory changes that could impact the company’s operations.
- Financial risks: Financial management is a complex subject fraught with risks. Successful companies maintain sufficient cash flow to fund all their operations and invest surplus cash using various financial vehicles. Financial risk managers help companies pick investments that align with risk appetite and avoid risky financial instruments.
- Economic risks: The country’s economic outlook significantly impacts a company’s performance. An economic recession lowers discretionary income, reducing people’s purchasing power. Risk management professionals use their extensive knowledge to help companies anticipate and cope with such risks.
How to Get Started in a Career in Risk Management
Risk management is a multifaceted career that requires academic and professional credentials. Here’s a simple guide to help you hit the ground running if you wish to pursue a career in risk management:
Get Your Bachelor’s Degree
Graduating with a bachelor’s degree in business-related subjects such as economics, finance, business administration, or accounting lets you hit the ground running. Some institutions offer specialized degrees in risk management, which are more holistic.
Pick a Specialization
Since you can’t jump into risk management without experience, you must build your chops first. That entails finding an entry-level job in an industry that interests you. Front-line jobs in operations make a great learning platform by offering profound insight into how risks materialize. They also offer plenty of opportunities to mitigate risk, which helps to build your perspective and sharpen your skills.
Pursue Professional Certification in Risk Management
Enrolling in professional risk management courses can equip You with the skills you need to build a successful career. Popular courses include Certified Risk Management Professional, Chartered Enterprise Risk Analyst (CERA), Certified Risk Manager, and Financial Risk Manager. Others include Professional Risk Manager, and Risk and Insurance Management Society Fellow.
Build Your Professional Network
Job hunting is easier when you have an extensive network of risk managers you can tap into. You can start by joining local professional organizations or following renowned risk managers on social media. LinkedIn is an excellent place to network with career professionals. Networking offers learning and mentorship opportunities and other insights, including the most in-demand skills.
Refine Your Risk Management Skills
The modern business environment is fluid and dynamic, which creates plenty of new and unknown risk scenarios. Building a solid core specialization helps you navigate the changing landscape skillfully. Mastering your skill builds your reputation and cements your status. It lets you stand apart from the rest and paves the way to a lucrative career. Risk management firms hire skilled professionals who can hit the ground running.
Build Your Experience
Be willing to build your career from the bottom and work your way to the top. The risk management framework has four career levels – support, management, senior, and leadership. Be willing to start at the support level and build your skills and experience as you climb the ladder.
Skills to Learn for Risk Management
Risk management careers cut across all industries, some of which require highly specialized skills. However, some risk management skillsets and experiences apply across the board, including:
- Strong analytical skills: Risk managers require strong analytical skills to understand the data and the cascading effects the data could have on an organization. You should model data to identify the possible risk scenarios that might affect the company. You need sharp analytical skills to identify the risk and create a clear plan of action if it does occur.
- Deep insights into business strategy: Business executives often lean on risk managers to provide strategic directions that reduce risk exposure. You need a sound understanding of the company’s business strategy to provide reliable and actionable advice.
- Leadership skills: Risk managers lead from the front. They’ll recommend and take charge of implementing the changes. It takes an organized mind to build new programs and convince and inspire dissenting voices to embrace the changes.
- Refined financial and economic skills: Risk managers are often charged with safeguarding a company’s financial well-being. You can only provide sound financial advice if you understand the company’s business economics.
- Critical thinking skills: Risk management requires exceptional problem-solving abilities rooted in critical thinking. You must approach a problem from various angles or make connections between seemingly unrelated events. Your duty is to help your clients understand how to eliminate risks or keep them at a manageable level.