When businesses try a new process or explore new funding, they experience new risks.
Risk isn’t an inherently bad thing. After all, businesses take risks by merely existing. However, it is essential to manage risks. That’s what organizations rely on their risk management specialists to help them find a path through.
What is a risk management specialist and what do they do? Keep reading to learn more about the role’s key objectives and skills. Do you have what it takes to be a risk manager?
What is a Risk Management Specialist?
A risk management specialist is someone who identifies and measures potential risks for an organization to make active decisions about managing them.
These three components (identify, measure, manage) largely describe what risk assessment expert does. Let’s look at each piece one-by-one.
Identify Risks
Risk managers start every process by identifying risks to operations, the enterprise, or both. But they don’t just find the issues that appear, they also document them and ensure that all the key players know about those risks.
How do they do this?
They start by identifying the apparent and potential risks through a risk assessment. This means combing through operational data and financial data to see not only where the risks are but how far they reach.
Then, risk managers go further by gathering both internal and external data and adding it to their knowledge base.
Measure Risks
It’s not enough to acknowledge the potential problems that lie ahead. You need to understand what those problems mean.
That’s why risk management specialists also use processes or systems to model risks (and use more systems to measure the modeling system’s validity).
Risk-assessment models tend to be mathematical and measure the financial impact of a particular risk. But not all consequences remain limited strictly to a company’s bottom line. Other areas touched by risk include:
- Risks to professional reputations
- Risks of loss of customer base or industry segment
- Risks to ownership structures
- Risks to legal structures
Taken together, the models provide analysis that not only identify the risk but also explain its position and what could happen in either scenario.
Manage Risks
With fuller knowledge of the apparent risks, risk management professionals then do two things: communicate their knowledge up to the chain and present solutions.
Risk assessment models produce findings, and managers then transform those findings into reports and presentations that explain everything their models found thus far.
They also use those points to recommend changes through a business lens to their respective audiences.
However, risk managers don’t take on new risks and perform unique analysis all the time. Often, the same risks arise over and over again. To combat this problem, risk managers (and their organizations) also plan and contribute to risk management systems, which help them systematically tackle these problems.
What Skills are Most Important to Risk Management Specialists?
Risk management is a data and analysis heavy job, but it also requires some skills you might not think about right away.
Information Gathering
Obviously, the most crucial skill for a person in this role to have is their ability to get all the information they need. They need to be able to observe, receive, or even hunt down every data point required for their job. If they can’t do that, they stumble on the starting block.
Communication
The second most critical skill isn’t necessarily data related. It’s communication.
If someone in their position can’t share their knowledge at all levels (with peers, subordinates, and supervisors), then their findings aren’t useful. Conveying the risk and data appropriately is critical to managing it within an organization.
Industry Knowledge
You don’t need to be an industry specialist to enter the field of risk management. However, you do need to become comfortable in your chosen market if you want to progress.
Some risks are unique to a specific market, and some roles require particular skills, like knowledge of operational risk or credit risk.
Analytical Skills
Your analytical skills will be the cornerstone of your career as a risk manager. With all your knowledge gathered, you’ll need to analyze them to understand the potential effects and what they mean in the context of the organization’s risk appetite.
Analytic skills include numeracy, but they aren’t limited to it.ย You’ll also need to come up with solutions that fall outside of data models.
Your Career as a Risk Management Specialist
Risk management professionals follow a steady career progression, despite companies not using uniform titles across the board.
Most enter the career as an entry-level or junior risk analyst. Junior risk analysts have a bachelor’s degree in a related field as well as a professional certification. Ideally, they also have a year or two of experience, usually through an internship.
From here, they progress to risk managers or risk management specialists/consultants.
With five to ten years of experience in the field and time to learn more about the evolution of risk in the digital age with an MBA, you might progress to one of the following senior roles (listed in order):
- Risk Control Supervisor
- Director of Corporate Risk Management
- Chief Risk Officer
Depending on the company, you can even find yourself in a C-level executive position!
Where Will Your Career Take You?
A career as a risk management specialist is an exciting one. Your role is fundamental to the success of whole organizations, and it’s always changing.
If you are an ever curious person who likes to have all the data and conduct a thorough analysis before making any decisions, you may have found your new career.
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