Risk management is all about protecting an organization’s best interests by planning for uncertainty, minimizing threats, and mitigating losses. But what does a risk manager do on a day-to-day basis? And why is the role so important?
Risk management is a growing profession that offers plenty of career opportunities. But it wasn’t always that way. Risk management was once known as a rather stodgy back-office operation with very limited access to the C-suite. Few business schools had dedicated risk management curriculums, and young people rarely aspired to become risk managers.
COVID changed that almost overnight – and the changes appear to be permanent. Risk managers now have the undivided attention of leadership hungry for actionable, real-time data on risks. And technology is fueling the rise in stature with reliable data and insights for more informed decision-making.
Why is Risk Management So Important?
No business is invulnerable to risks. Risk exists in many forms – corporate, financial, operational, cyber, third party, supply chain, reputational, and more. Risks vary in size and scope, as well as by industry.
Some risk is necessary for growth. But the business consequences can be significant if you are blindsided by a risk you didn’t see coming. A risk manager’s job is to apply risk management techniques to identify risks, assess the potential impact, and decide on a course of action. This information will help the board and leadership take the right risks without jeopardizing the business.
What Responsibilities Does a Risk Manager Have?
Over the years, the risk management profession has expanded beyond its insurance-buying roots to include risks of all types across the enterprise. Managing those risks covers a wide variety of tasks that vary by organization and industry. In general, risk managers:
- Collect and analyze data on internal and external risks.
- Compare risk data with the organization’s risk appetite.
- Communicate key threats to management.
- Evaluate company policies and risk potential.
- Appraise existing risk management methods.
- Assess risks versus rewards through qualitative and/or quantitative analysis.
- Continually reassess risks according to changing conditions.
- Address any weaknesses make appropriate changes.
How Does a Risk Manager Help Leadership?
Reporting is a key part of a risk manager’s role. Boards and leadership look to risk managers to provide information on the risks that can impact critical business processes and profitability. They need high-quality insights and risk data to inform strategic decisions for the company. Risk information can also help reduce costs, increase growth, and improve customer satisfaction.
What Skills and Qualifications Does a Risk Manager Need?
The role of the risk manager today is quite complex, requiring a range of skills. They need the acumen to assess everything from claims to supply chains. They must maintain numerous relationships inside (e.g., HR, IT, legal) and outside (e.g., insurance brokers, TPAs, law firms) the organization. They also must have the ability to understand a balance sheet, quantify costs, and answer to regulators and a wide range of stakeholders.
Good communication skills are a must. Risk managers must translate complex risk data into understandable insights – and be confident presenting and sharing those insights with leadership.
Risk managers often have an analytical background – but that is not a requirement. Indeed, the journey to becoming a risk all-star is as varied as the personalities involved.
What Does a Risk Manager Do with Technology?
In today’s climate of ever-changing threats, risk-informed decision-making can be a real differentiator. Yet siloed risk information on spreadsheets provide no basis for accurate forecasting, contingency planning, or coping with intensifying regulatory requirements. That takes a more advanced software solution.
Technology such as a Risk Management Information System or RMIS consolidates risk data and provides real-time information to inform the board and leadership. A RMIS provides a clear view of risks, the relationships between risks, and the impact on the organization. The software also saves time and improves accuracy by automating tasks and streamlining workflows.
With the right technology, risk teams can stop managing spreadsheets and start managing risk at a strategic level – which is exactly what the C-suite is looking for.
What does a risk manager do? In short, risk managers protect the business and its future. It’s no wonder that organizations are ramping up their risk management hiring.
If you are considering a career in risk management, check out Riskonnect’s Risk All-Stars, how they got into the profession, what they love about it, and what words they live by.