What Does a Risk Manager Do? (How To Become One and Skills)
Updated 17 August 2022
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Whether small or large, every business is prone to risks and understanding how to resolve these risks effectively helps a company thrive in a competitive landscape. To measure, identify and evaluate these risks, a company hires a risk manager. Knowing these professionals' primary duties, earning potential and skill set can help you decide if this career is suitable for you. In this article, we answer “What does a risk manager do?”, understand the risk management types, explore the salary these professionals earn, understand the skills required and outline the steps to become a risk manager.
What Does A Risk Manager Do?
The primary role of a risk manager is risk management. Risk managers work with companies to identify and assess the potential risk that can hinder a company's reputation, security, safety and financial prosperity of their organisation. These managers are accountable for analysing, assessing and handling the risk faced by different organisations. A part of their workday involves strategies to eliminate, minimise and transfer the risk a company is likely to face. Some of their typical job duties are:
Making risk assessment that involves analysing the risk and identifying and estimating risks affecting a business
Establishing and quantifying an organisation's ability to accept the risk
Planning, designing and implementing an overall risk management process for the organisation
Assisting in the review of proposed facilities, new programs and major contracts
Gathering confidential information from clients such as assets, income and debts
Preparing a risk-management and insurance budgets
Performing a risk evaluation and understanding the company's previous handling of risk
Providing training to the organisation's staff to keep them aware of the risks
Conducting compliance and policy audits
Maintaining records of insurance claims and policies
Reviewing internal business proposals and new major contracts
Preparing action plans to decrease the organisation's risk factors
Drafting business continuity plan to limit and reduce risk
In general, the work of a risk manager aligns with that of a project manager because risk assessment is an important factor in determining whether a project is viable to complete without facing losses.
Related: What Is a Project Manager? (Duties and Qualification)
Types Of Risk Management
Typically, a risk manager responds to various categories of risks. Here are some common types of risk management you may encounter during your career:
Legal: Lawsuits from vendors, customers, competitors and even government organisations may prove a threat to a business. Risk managers assess these legal vulnerabilities and implement policies and procedures to reduce this effect of a legal risk.
Financial: Changes in the financial markets can interfere in business cash flow management and a company may end up investing in a riskier financial instrument. A financial risk manager's job is to reduce these risks and keep a company's financial risk at a manageable level.
Operational: Operational risk pertains to machinery that no longer works, obsolete processes and key employees who leave an organisation. A risk manager identifies these spots in the organisation's operation and develops plans to deal with such operational problems.
Strategic: Organisations may face risk because of changes in a particular market. A risk management professional keeps the organisation focused on the outside world and looks for market change signs to help a company change its business strategy.
Regulatory: Every organisation complies with central and state government rules and regulations for its industry. Regulatory risk managers keep a check on changing and existing regulations to build organisational policies that comply with the law.
Economic: The economic health of a state or country can adversely affect the functioning of an organisation. These risk management professionals study historical data and trends to predict future recessions and booming economies.
Average Salary Of A Risk Manager
The average salary of a risk manager is ₹7,65,666 per year. Their exact salary may depend upon their experience, qualification, industry in which they work and job location. Some cities pay a higher salary than others. For instance, the average salary of a risk manager in Indore is ₹10,70,820 per year, the average salary in Kochi is ₹10,00,000 per year and the average salary in Gurgaon is ₹7,23,107 per year. If you want to earn a higher salary, you may choose a city that offers the highest salary to risk managers.
Related: Salary Negotiation Tips and Examples
Skills Of A Risk Manager
A risk manager requires both hard and soft skills to excel in their workplace. If you want to pursue a career in risk management, focus on improving these skills:
Proficiency in risk assessment tools: During your job role, you may use different assessment tools to assess and identify the risk associated with an organisation. Having the ability to use tools like decision trees, failure modes and effects analysis (FEMA) and the Bowtie model is desirable for this job role.
Organisational skills: As a risk manager, you may simultaneously assess or work on multiple projects, which requires exceptional organisational skills. Planning and time management are two essential aspects of this job role.
Mathematics: A risk manager deals with dollars, numbers and other data, which requires basic numerical and mathematical skills. So employers prefer hiring candidates who possess strong mathematics skills.
Business knowledge: As a risk manager deals with businesses of all kinds, this role requires knowledge in regulatory and legal topics. Depending on the industry you work in, you may require an in-depth understanding of that sector and industry.
Communication skills: A part of your workday involves providing risk training to other employees of your organisation. While explaining concepts related to risk and how a particular risk may affect your organisation, you require excellent communication skills.
Computer literacy: As a risk manager, you would write reports, analyse data and work on different spreadsheets to determine the risk associated with a particular project or proposal. You may also use different analytical and software tools for in-depth risk analysis.
Problem-solving: After identifying potential risk, you may find a solution to overcome or mitigate the effect of risk on your organisation. Employers prefer candidates with problem-solving skills because such candidates look for strategic answers for any business issue.
Strategic and analytical thinking: Regardless of the category of risk you specialise in, a risk manager possesses excellent analytical thinking and has a keen eye for details. Having the ability to analyse data to make strategic business decisions is a desirable skill for this role.
How To Become A Risk Manager
To become a risk manager, follow these steps:
1. Earn a bachelor's degree
For becoming a risk manager, the bare minimum requirement is a bachelor's degree. Having a business-related degree in areas such as economics, accounting, finance or business administration. You can even pursue different courses in risk management. Courses like BBA or BCom in risk management can also help you become a risk manager. You might choose a bachelor's degree in risk management, which may offer a specialised course.
2. Get hired for a risk management role
A risk manager is a managerial role and requires some prior experience to excel in the job. So, during your graduation, try to get jobs in industries that hire risk managers to assess their company's risk. For example, you can seek an internship or an entry-level position in a stock-brokering firm as they select investments for their clients. Experience in such roles can help you develop the skills required to excel in this career. The skills you develop in such a financial risk management position are transferrable and help you transition into any risk-management specific role.
Related: Top 10 Careers in Stock Market (With Duties and Salary)
3. Complete your post-graduation
Though post-graduation qualification is not mandatory, it can be helpful if your degree does not relate to risk management. You can pursue a master's degree in risk management and related areas. Many courses focus on particular areas like financial or corporate or health and safety management. You can pursue a Master in Business Administration (MBA) in risk management to help your career grow.
4. Obtain a professional certificate in risk management
Various certifications in risk management can help your career grow. There are various online and offline courses that you can take to speed up your career graph. Search online for different certifications and choose one based on your interest. Some common certifications are:
PMI risk management professional certification
Certified risk management professional (CRMP)
Financial risk manager (FRM)
Chartered enterprise risk analyst (CERA)
Certified risk manager (CRM)
Professional risk manager (PRM)
Please note that none of the companies mentioned in this article are affiliated with Indeed.
Salary figures reflect data listed on Indeed Salaries at time of writing. Salaries may vary depending on the hiring organisation and a candidate's experience, academic background and location.
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