Risk Manager Definition
A risk manager evaluates the potential risks of a business and strategizes preventive measures. In addition, risk managers determine risk appetites, prepare risk budgets, present risk reports, and train employees to enhance risk awareness.
They are employed by insurance companies, accounting firms, asset management companies, and securities exchange firms. They coordinate internal and external auditors—compliance and policy audits. In addition, they appraise new contracts and internal business plans that can further mitigate risk.
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- Risk managers analyse, quantify, and mitigate various potential uncertainties of a business.
- A bachelor’s degree is the minimum educational requirement to become a risk manager.
- Aspiring canidates must possess problem-solving skills, knowledge of finance, quantitative skills, ability to sort and organize information and the ability to write with precision.
- Risk management is a lucrative career option. Risk managers are always in demand—the economy grows—identity theft and data breaches increase. Risk managers average $116,607 a year in the US.
How to Become a Risk Manager?
Risk management requires the complete know-how of various uncertainties. Risk managers should be able to spot key indications and control their impact on the business.
Qualification: A bachelor’s degree is the minimum educational requirement to become a risk manager. However, recruiters typically prefer postgraduates. Various risk management courses and degrees are offered.
Some of the risk management undergraduate courses are as follows:
- Bachelor of Business Administration in Risk Management and Insurance;
- BSc in Risk Management and Insurance;
- BA (Hons) in Finance, Investment, and Risk;
- BSC (Hons) in Finance, Investment, and Risk;
- Bachelors in Banking & Finance (Hons) Specialization in Investment and Risk Management;
- Bachelors in Risk Management & Environment Engineering;
- Bachelors in Finance and Credit;
- Bachelors in Corporate and Homeland Security.
The Postgraduate courses in this field are as follows:
- Master of Science in Cyber Risk Management;
- Financial Compliance and Risk Management;
- MBA in Risk Management;
- Master’s Degree in Systemic Risk;
- Master of Science in Decision Analysis;
- Master of Public Administration: Public Administration Leadership and Crisis Management;
- MSc in Cyber Risk Strategy and Governance;
- MS in Mathematical Finance & Financial Technology (MSMFT);
- MS in Finance and Risk Management;
- Master of Science in Risk Management and Insurance (MS-RMI);
- Master of Science in Cybersecurity Risk Management.
Risk Manager Certification
Several certifications are available for an aspiring risk manager. These give individuals an edge. Some of the recommended certification courses in this field are as follows:
- Certified Risk ManagerCertified Risk ManagerCertified Risk Manager is a finance course offered by the National Alliance for Insurance Education and Research. A professional in the finance arena and interested in risk management and related fields, such as insurance, loss control, legal accounting, claims specialists should take this course to climb the corporate ladder. (CRM) granted by the National Alliance for Insurance Education & Research;
- Financial Risk ManagerFinancial Risk ManagerFRM exam (Financial Risk Management) is a part of tests conducted by the Global Association of Risk Professionals to issue an FRM certification to the person who passes the exam recognizing candidate’s eligibility to work in an economic environment as they possess a strong knowledge and sound understanding of financial risk, analysis, and management. (FRM) offered by the Global Association of Risk Professionals (GARP);
- Chartered Financial AnalystChartered Financial AnalystThe Chartered Financial Analyst (CFA®) Program offers a graduate-level curriculum and examination program designed to expand your working knowledge and practical skills related to investment decision-making. (CFA) from the CFA Institute;
- Certified Risk and Internal Control Professional (CRICP) offered by the Association of Internal Control Practitioners (AICP);
- Certificate in Operational Risk Management (CORM) issued by the Institute of Operational Risk (IOR);
- Chartered Enterprise Risk Analyst (CERA) provided by the Society of Actuaries (SOA);
- Professional Risk ManagerProfessional Risk ManagerPRM (Professional Risk Manager) is a designation given to any person who has passed a series of examinations conducted by PRMIA (Professional Risk Managers’ International Association) and has the necessary qualifications to certify them that they have the requisite knowledge to measure the professional risk for a financial or non-financial body, quantify it and analyze it. (PRM) granted by the Professional Risk Managers’ International Association (PRMIA);
- Risk and Insurance Management Society Fellow (RIMS Fellow); certification offered by the Risk and Insurance Management Society (RIMS).
A risk manager should possess the following skills:
- Problem-Solving Skills: Risk managers should possess a desire to help companies handle uncertainties. Spontaneity and composure under pressure really come in handy.
- Business, Finance, and Regulatory Knowledge: Aspirants should have an elaborate understanding of the corporate world, financial marketsFinancial MarketsThe term "financial market" refers to the marketplace where activities such as the creation and trading of various financial assets such as bonds, stocks, commodities, currencies, and derivatives take place. It provides a platform for sellers and buyers to interact and trade at a price determined by market forces., trends, and government regulations.
- Math Skills: A risk manager must possess exceptional quantitative skills.
- Organizational Skills: The ability to sort and organize things is vital as risk managers process massive volumes of information, documents, and data within a short period.
- Communication Skills: Managers have to explain various concepts to individuals from varying backgrounds, including top-level executives.
- Writing Skills: These Professionals often need to prepare risk reports, and therefore must be capable of writing in a precise manner.
Aspirants start as risk analysts. Usually, companies prefer management candidates and those involved in the development of predictive models.
Risks are varied; candidates must possess expertise in handling particular kinds of uncertainty. For instance, a securities firm looks for prior experience in tracking securities losses.
Responsibilities and Duties
Risk Managers are always in demand—the economy grows—identity thefts and data breaches increase. Market fluctuations pose a variety of uncertainties for the players.
Risk Managers are employed in finance, information and security, technology, commodity, enterprise, market, credit, environment, corporate governance, compliance, and business operation sectors.
Following are the responsibilities and duties of a risk management professional:
- Risk managers analyze the current risk profile pertaining to company operations, employees, and other stakeholders. Consequently, they strategize practices that can identify potential uncertainties.
- They quantify future risk and evaluate existing measures for risk mitigation.
- They Ascertain the firm’s risk appetiteRisk AppetiteRisk appetite refers to the amount, rate, or percentage of risk that an individual or organization (as determined by the Board of Directors or management) is willing to accept in exchange for its plan, objectives, and innovation..
- They design a methodology for the overall risk management processes of the organization.
- They develop contingency plans to deal with potential risks.
- They prepare a risk budgetRisk BudgetRisk budgeting is a portfolio allocation strategy in which the portfolio's risk is distributed among the various asset classes to maximize the overall returns. The framework involves identifying and quantifying the uncertainty along with developing a plan for risk management..
- They formulate risk reports and present them before top-level executives. This presentation summarizes risk findings and mitigation measures.
- Managers communicate with the stakeholdersStakeholdersA stakeholder in business refers to anyone, including a person, group, organization, government, or any other entity with a direct or indirect interest in its operations, actions, and outcomes. and covey the risks posed by corporate governance.
- They coordinate internal and external auditors—compliance and policy audits.
- They appraise new contracts and internal business plans that can further mitigate risk.
- Finally, risk management professionals train employees to enhance risk awareness.
Risk Manager Salary
A risk manager’s remuneration depends on educational qualifications, subject knowledge, skills, certifications, and experience. As of December 2021, risk managers average $116,607 a year in the US. The yearly salary offered to a risk manager ranges between $101,087 and $133,467.
But the salaries vary across industries. Professional, scientific, and technical services offer more than the median salary. For example, Deloitte pays its risk professionals as high as $508,188 per annum. Similarly, the yearly salary of a senior risk manager at J.P. Morgan averages around $161,604 in the US.
Frequently Asked Questions (FAQs)
A risk management professional facilitates the smooth functioning of corporations by foreseeing and evaluating future uncertainties associated with business, finance, investment, market, credit, compliance, and security.
These managers aid the organizations by planning and controlling uncertainties, before encountering massive losses. Risk managers ascertain risk appetites, make risk budgets, prepare risk reports, and develop a risk management mechanism.
Risk management is often seen as a lucrative career option for aspirants who are good at decision-making and problem-solving. It is also a satisfying experience to help a company overcome adverse conditions.
The four common methods of risk management include:
2. Reduction or Prevention,
3. Transfer, and
This article has been a guide to Risk Manager and its definition. Here we discuss risk manager certifications, skills and responsibilities, and their salary. You can learn more about it from the following articles –