Risk Manager Career Guide

What is a risk manager?

A risk manager is a professional who identifies, assesses, and prioritizes uncertainties that could impact an organization’s ability to achieve its objectives. They work across multiple departments to create strategies and plans to minimize, monitor, and control the impact of such uncertainties or risks. Their work is necessary for preserving the organization’s resources – both physical and intangible assets – and ensuring sustainable performance.

While risk is inherent in any business or organization, the manager’s presence helps to mitigate negative impacts. They support the growth and longevity of the organization by guarding against potential financial, legal, and operational challenges. By proactively identifying potential problems and implementing appropriate measures, these professionals contribute significantly to the resilience and profitability of a business.

Duties and responsibilities

A risk manager is responsible for designing and implementing an organization’s risk management processes and structures. They identify potential hazards that could negatively impact an organization’s financial health, legality, or reputation and develop strategies to minimize these risks.

Their responsibilities include creating and disseminating risk analysis reports to the relevant departments and stakeholders. They also keep track of new and emerging threats that could adversely affect an organization and stay current on related regulations and laws. Additionally, they offer training to employees about risk prevention and mitigation.

Work environment

Risk managers typically work in an office environment within an organization’s headquarters or branch offices. They often collaborate closely with other departments, including finance, legal, human resources, operations, and sometimes, the company’s management. Their role requires considerable interaction with others since risk prevention and mitigation strategies commonly involve various parts of an organization.

Their work environment can be demanding, requiring deep focus and attention to detail. From meticulously reviewing contracts and policies to analyzing complex data, they are expected to handle multiple responsibilities simultaneously adeptly.

Typical work hours

Risk managers generally work full-time during regular business hours, from Monday to Friday. However, the nature of their job might require them to stay available outside of these hours, especially during internal audits, advisory meetings, or in the case of a risk event. Therefore, flexibility is often a prerequisite for this role.

In some industries, they may need to travel to meet with various organizational branches and regulatory bodies or to attend relevant conferences and workshops. The hours during such travels may significantly vary from the regular schedule.

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How to become a risk manager

This career guide section outlines how to become a risk manager. The path often involves obtaining specified education, earning relevant professional experience, and attaining specialized certifications.

Step 1: Obtain a bachelor’s degree

The first step is acquiring a bachelor’s degree. It is common for future risk managers to study fields such as finance, business administration, accounting, or a related area. These programs of study provide a broad understanding of financial principles and business procedures which are foundational in the role of risk management.

Step 2: Gain professional experience

After graduating, it’s important to gain practical professional experience. Many start their career in entry-level business or finance positions to understand how businesses operate and experience first-hand the various types of risks they face. This groundwork can be essential when advancing to more senior risk management roles.

Step 3: Earn a master’s degree

While not always required, earning a master’s degree in a related field (such as a master’s in risk management or an MBA with a concentration in risk management) can greatly increase your job prospects and potential salary. These programs usually provide specialized training in identifying and mitigating business risks.

Step 4: Obtain certifications

Certifications can be instrumental in demonstrating your expertise in risk management. Multiple organizations offer risk management certifications, such as the Financial Risk Manager (FRM) certification offered by the Global Association of Risk Professionals or the Professional Risk Manager (PRM) certification provided by the Professional Risk Managers’ International Association. Having these credentials can give you an edge in competitive job markets.

Step 5: Continue professional development

Like many professions, risk management is a rapidly evolving field. Regularly updating your knowledge of industry trends, regulations, and best practices, as well as adapting to technological advancements, will ensure your competence in managing ever-changing business risks. This can often be achieved through workshops, seminars, or professional development courses relevant to your industry.

Step 6: Apply for jobs

With a strong educational background, relevant experience, and appropriate certifications, you become qualified to apply for risk management positions. These roles could be in a variety of environments, such as financial institutions, insurance companies, healthcare organizations, retail companies, and more. Tailor your resume and cover letter to highlight the skills and experiences most applicable to the role you’re applying for.

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How much do risk managers make?

Risk manager salaries will vary by experience, industry, education, location, and organization size. Career progression, managerial responsibility, the size of the portfolios managed, and the level of risk associated can all significantly affect their compensation.

Highest paying industries

• Securities and Other Financial Activities – $148,450
• Computer Systems Design – $138,300
• Software Publishers – $132,750
• Scientific Research and Development Services – $131,870
• Management of Companies and Enterprises – $128,570

Browse risk manager salary data by market

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Types of risk managers

This career guide section highlights the various career types and areas of specialization for risk managers. Below, we explore the unique attributes and responsibilities of each job title.

Credit risk manager

As a risk manager in the credit field, you’ll be tasked with assessing the creditworthiness of potential clients. This involves intricate analysis of financial data to predict a borrower’s ability to pay back loans, reducing financial losses for the organization.

Operational risk manager

These specialists focus on identifying and preventing operational hazards. Your role would involve analyzing internal processes and systems to minimize the risk associated with human error, system failures, or external events.

Regulatory risk manager

The primary job of a regulatory risk specialist is ensuring the company’s compliance with applicable laws and regulations. This role involves tracking regulatory changes, advising on their impact, and fostering a culture of compliance within the organization.

Enterprise risk manager

Enterprise risk managers take on a broad view, working to identify and mitigate risks across an entire organization. They play an essential role in strategic planning, ensuring all types of risk – operational, financial, reputational, and more – are accounted for and managed proactively.

Technology risk manager

These specialists focus on the risks associated with using and adopting technology within an organization. From security breaches to IT system failures, technology risk managers work to anticipate and minimize potential disruptions and damages.

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Top skills for risk managers

This section outlines the primary skills and traits needed for career success as a risk manager. Acquiring a diverse blend of practical abilities and personal attributes can significantly enhance performance in this role.

Analytical abilities

To successfully fulfill the responsibilities of a risk manager, deep analytical skills are instrumental. These capabilities enable one to conduct complex assessments, interpret extensive data, and draft detailed reports. The ability to identify and solve problems rooted in risk scenarios further elevates these skills.

Leadership skills

High-grade leadership skills are essential for this managerial position. Coordinating risk-related projects, directing teams, and influencing colleagues and higher-ups require a commanding presence, decision-making capability, and the ability to inspire and motivate others.

Communication proficiency

Clear, concise communication skills, both written and verbal, are pivotal in this role. As they touch multiple areas of an organization, these managers need to interact with people across departments and levels, communicating complex ideas in an understandable manner and making stakeholders understand potential risks.

Knowledge of regulatory environments

Due to the nature of their responsibilities, they should be conversant with any regulatory environments of the industry in which they operate. This includes understanding laws, rules, and regulations that might impact the company’s operational, financial, and strategic decisions.

Attention to detail

Accurate, meticulous work is intrinsic to their daily duties. Attention to detail helps to ensure accurate evaluation of potential risks, proper implementation of risk mitigation strategies, and effective communication of risk-related information to stakeholders. Inaccuracies or overlooked facts at this level can lead to significant repercussions.

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Risk manager career path

As a risk manager, you build a solid foundation in understanding, analyzing, and managing risks that might affect various aspects of a business. This role tends to be a stepping stone, allowing you to cultivate your management skills and strategic thinking capability, which are valuable in a wide range of professional contexts.

Promotion within the risk management field usually means moving into roles with greater responsibility and impact. Experienced managers often have the opportunity to progress into senior management roles, such as senior risk manager or director of risk management. They might also move laterally into related fields such as compliance or insurance.

At some point in their career, many choose to specialize in a particular area. This could be a specific type of risk, such as operational, credit, or market risk. Alternatively, it might be a specific industry, allowing them to become a recognized expert in managing the unique risks faced by those operating in that sector.

Beyond technical roles, they also have the potential to move into consulting. This could involve working for a major consultancy firm, advising clients on risk management issues. Alternatively, they could start their own risk management consultancy. This path offers a lot of flexibility and the potential to shape your work to suit your interests and preferences.

Some also leverage their skills into entrepreneurship, founding their own companies. Their risk management expertise can be incredibly valuable in navigating the potential pitfalls of establishing and running a successful business. Additionally, the strategic skills you develop as a risk manager can be useful in a wide variety of roles outside traditional risk management, whether general management, operations, or strategy roles.

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Similar job titles

• Insurance Adjuster
• Loss Control Specialist
• Claims Adjuster
• Insurance Claims Examiner
• Insurance Agent
• Actuary
• Procurement Manager
• Financial Analyst
• Contract Negotiator
• Underwriter

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Position trends and outlook for risk managers

With rapid technological changes and more stringent regulatory requirements, risk managers are weaving themselves into the fabric of companies across all industries. Technological advancements, particularly in AI and machine learning, guide these professionals to identify and manage potential risks from these disruptive technologies. As emerging risks and uncertainties soar, their role extends beyond managing existing business risks and preventative plans. They are expected to adapt and learn from real-time threats continuously, striving for the resilience of companies in the face of unexpected shocks.

The scope of risk management is also expanding toward environmental, social, and governance (ESG) related risks. Companies worldwide are under increased pressure to become sustainable and socially responsible. While these have become critical discussion points in the business world, it also raises unique challenges to managing such risks. The understanding and mitigation of ESG-related risks not only boost the brand’s reputation but also helps pinpoint potential profit opportunities.

Employment projections for risk managers

According to the U.S. Bureau of Labor Statistics, employment opportunities for financial manager roles, including risk management, are projected to grow by 17% through 2031. This rate is much faster than the average for all occupations. The trend underlines the growing demand for risk management skills as businesses face new challenges and uncertainties from the ever-changing economic and technological landscape.

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Risk manager career tips

Master risk management frameworks

Every risk manager must have an impeccable understanding of the commonly used risk management frameworks and their applications. These foundational structures help companies quantify and qualify risks, implement procedures, and track risk management efforts. Familiarize yourself with frameworks including but not limited to COSO ERM, ISO 31000, PMBOK, and Basel Accords.

Develop solid analytical skills

Strong analytical skills are paramount, as this role typically involves evaluating large amounts of data and economic models. Refining these skills can allow for a more innovative approach to the identification, evaluation, and mitigation of potential risks.

Stay informed about industry trends

Staying current on industry trends will not only help you anticipate events that could affect liability but also assess the relative risk involved with various business strategies. Regularly reading relevant academic and industry materials and participating in webinars or workshops can help keep you informed.

Certifications and further education

Consider additional certifications and continued education to enhance your career. Certifications such as Financial Risk Manager (FRM), Certified Risk Manager (CRM), or Professional Risk Manager (PRM) can make you more desirable to employers and clients.

Build a professional network

Building a network of risk management professionals enables the exchange of information, knowledge sharing, and professional growth. Here are several networks and associations that you should consider:

• Risk and Insurance Management Society (RIMS)
• The Society of Risk Management Consultants (SRMC)
• International Association of Risk and Compliance Professionals (IARCP)
• Global Association of Risk Professionals (GARP)

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