The role of a risk management officer or a risk manager is important in every company. Every company needs to be able to manage risk properly; the way that risk is handled internally affects the overall cost that the company has to spend for insurance. This task falls upon the shoulders of a risk manager.
A risk management post is not an entry-level job and normally requires work experience of at least five to seven years. The experience should ideally be in an insurance company or a legal office. Specific experience in claims is also favored, and so are specialist background in risk analysis certification, data modeling, and portfolio management. Some companies, depending on the industry, may also require ERP platforms, VBA, and SAB, among others.
As for educational background requirements, a risk manager has to have at least a bachelor’s degree, preferably in a finance-related program as the job of a risk manager requires deep analytical thinking and the ability to understand financial risk, the biggest type of risk that all companies are worried about. Some companies also prefer applicants with an MBA or other higher degree such as accountancy qualifications like ACA or CIMA, especially if the industry calls for it.
Primary Tasks and Responsibilities
- Identifying risks and eliminating them
The main task of a risk manager is to identify and eliminate any risks that may result in the loss or property of the company or in the company’s legal liability. He or she must be willing to look into all aspects of a business to ensure that no risks are left uncovered and unresolved. He or she must also be ready to try and explore any and all techniques in lessening and managing risk.
- Auditing risks and implementing risk reduction policies
In dealing with risks, the risk manager has to be able to draft contingency plans, implement them, conduct investigations, conduct demonstrations, and guide employees in general. All in all, risk assessment is a challenging and demanding task that would require more than just a basic understanding of finances. That is why risk management jobs are also ideal for audit professionals looking for something else.
- Risk reporting to senior management and to stakeholders
Risk managers are expected to communicate directly with senior management. Reporting requirements include the enumeration of risk issues and reports on plans on how to minimize risk. Upper level management may also require risk managers to provide status updates on risk aversion projects or on the level of risk the business is exposed to. In certain situations, the risk manager has to testify as the company’s main spokesperson.
In the course of risk management, the risk manager can also provide the company with insights on how to optimize, develop, and improve other aspects of the business that may lead not just to the absence of risk but also to greater profit.
- Buying insurance and implementing policies on how to ensure worker safety
Risk managers are also directly responsible for all aspects of the company’s insurance. The risk manager is responsible for planning and coordinating the insurance policies of the company’s employees and liabilities. He or she is also responsible for filing claims with the insurance companies in the event that claims become necessary in the course of business.
Risk managers should also lead in the implementation of safety policies and in making sure that the company adheres to necessary safety regulations such as the ISO standards.
Modern risk managers these days are also left with another responsibility: data security. In this day and age when the Internet is the most powerful medium but is imperfect, a risk manager should also cover the risks of unauthorized site access and data loss.
Secondary Tasks and Responsibilities
Risk managers are sometimes given secondary roles, especially in smaller companies. The most common secondary role that falls upon the shoulders of the risk manager is that involving the company’s employee union relations. The risk manager sometimes takes an active role in negotiations, and is also sometimes responsible for the promotion of employee safety awareness.
Types of Risks To Manage
The full job description of a risk manager will depend on the types of risks that the company is faced with. Since different industries face different risks, not all risk managers have the same list of specific responsibilities and tasks. In general, the common types of risks that fall under the responsibility of risk managers include:
- Financial risks
- Credit risks/loan defaults
- Liquidity risks
- Safety risks
- Manpower risks
- Operational risks
- Legal risks
- Environmental risks
- Losses on securities
Most businesses have financial, credit, liquidity, and liability risks, whereas safety, operational, and manpower risks are more common in manufacturing companies.
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