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.
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.
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.
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
Highest paying states
- New York – $155,760
- California – $145,320
- Connecticut – $141,120
- New Jersey – $138,920
- Delaware – $137,540
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.
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.
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.
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.
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.
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.
Similar job titles
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.
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)
Where the risk manager jobs are
- JPMorgan Chase
- New York
Top job sites
What does the day-to-day work of a risk manager entail?
The day-to-day responsibilities of a risk manager often vary depending on the organization and industry. Generally, they spend a significant part of their day assessing various risks associated with the operations of their organization. This could involve meeting with department heads to understand current projects, researching and analyzing data, implementing or monitoring risk management processes, conducting risk assessments, and creating reports on their findings. They must also stay updated on industry trends and regulatory changes affecting the organization’s risk profile.
What personal skills are beneficial for a risk manager to have?
A successful risk manager typically exhibits a strong analytical mindset, as the role requires substantial research, analysis, and problem-solving. Good team management skills are also critical, as the role often requires interacting with various department heads and team members. Additionally, excellent communication skills are essential to convey risks and potential solutions to key organizational stakeholders effectively. Finally, a sound understanding of business processes and strong decision-making skills are indispensable.
What technical skills are beneficial for a risk manager to have?
For risk managers, technical skills may include knowledge of risk assessment models and risk management frameworks, data analysis, and project management. Familiarity with industry-specific software, as is proficiency in commonly used office software such as spreadsheets and databases, is also helpful. Knowledge of relevant regulations and legislation is also critical. A finance or business administration background may be beneficial for understanding the complex financial aspects of risk analysis.
What certifications are available for a risk manager?
Several industry-recognized certifications can further validate the expertise and skill of a risk manager. These include the Certified Risk Manager (CRM), the Associate in Risk Management (ARM), the Certified in Risk Management Assurance (CRMA), and the Chartered Enterprise Risk Analyst (CERA).
Are risk managers typically required to travel?
Travel expectations for risk managers can vary greatly depending on the sector and organization. In certain positions, such as those involving global or multinational companies, travel may be more frequent, especially if risk assessments are needed in various operational locations. In contrast, in a more localized business, most of the work can often be conducted from a main office or remotely, with little to no traveling required.
What type of companies hire risk managers?
Risk managers are hired by a wide range of organizations across nearly every industry. Banks, investment firms, insurance companies, healthcare organizations, manufacturing companies, and even educational institutions utilize risk managers to identify potential risks and create strategies to minimize or manage those risks. Additionally, many consulting companies hire them to offer risk management solutions to their clients.
What are the areas of specialization for risk managers?
Risk management is a broad field with numerous specializations. Risk managers can specialize in a particular type of risk, such as operational, financial, legal, or strategic risk. They can also focus on specific industries like healthcare, banking, or manufacturing. Some concentrate on risks related to cybersecurity or environmental hazards. The right specialization will depend on one’s interests, background, and career goals.
What kind of education is typically required to become a risk manager?
Usually, a bachelor’s degree in finance, business administration, accounting, or economics is required to become a risk manager. These programs offer valuable foundational knowledge, especially in financial risk analysis and management principles. Some roles may require a master’s degree in a related field, especially for senior or executive risk management positions. Specific courses or minors in risk management can be especially valuable.
Can a risk manager work remotely?
Yes, risk managers can often work remotely, but this also depends on the organization and industry. The nature of the work, which involves research, analysis, and communication with team members, can often be performed remotely. However, some roles may require on-site risk assessments or in-person meetings. Therefore, while remote work is possible, it may not be feasible in all situations.