The world of risk management is much more than just crunching the numbers.
In addition to assessing profitability, identifying potential risks and minimising business losses, the successful risk manager is also adept at understanding the roles of different departments and working with them in an effective manner.
A natural people person with a sharp analytical mind, risk managers know their business inside out. But when it comes to training, qualifications and experience, what’s required of them? Here, we’ll delve into the background of a risk manager, and the skills you’ll need to land that coveted role in the process.
Are any key soft skills needed, or are emerging skill sets more important?
While hard skills are an undeniable foundation, the well-rounded risk manager will have plenty of soft skills at their disposal to strengthen their expertise.
For a start, you’ll be communicating with a lot of different people. Since technical skills tend to be easier to develop when compared with soft skills; great people persons, who are naturally confident around others, will be a great fit for the role. Increasingly, firms look for people with more than just quantitative skills; the need for excellent communication and presentation abilities becoming more and more important, too.
Risk managers have to be able to present technical financial products and complex risk management concepts to those unfamiliar with such ideas in a streamlined, understandable way. Strong interpersonal and communication skills are top priority here.
Likewise, robust networking skills can come in handy as a risk manager too. As well as developing professional connections on Twitter and LinkedIn, there are financial centres across the country that host events, conferences and lectures which make for excellent ways to meet other risk managers. The advantages are plentiful too; you’ll gain extra knowledge of the sector, prioritise issues and topics, broaden your risk management lexicon and get involved with initiatives that show a willingness to go beyond expectations.
Do you need any training or qualifications?
An academic background where quantitative skills have been sharpened, such as a degree in finance, physics, statistics or computer science, will stand you in good stead from the outset. The more specific the better: an MBA in finance, a degree whose courses are abundant with quantitative finance, will look superb on your CV and demonstrate your numerical prowess.
Additionally, specific risk management qualifications will bolster any application. The Institute of Risk Management has a variety of risk management qualifications – head there if you’re interested in a risk-based career.
What key experience is required?
While a finance degree isn’t essential for becoming a risk manager, a knowledge of numbers is key to showing you have the financial acumen required. All good risk managers must be able to understand the financial indicators tied to an organisation’s assets, platforms, markets, regulations and stakeholders. Translating broad concepts and risks into specific items, such as key risk indicators, is important, as is using numbers to reach decisions in a speedy, but technically sound, manner.
Consider your knowledge of the industry you plan to go into. Whether it’s finance, insurance, energy or retail, the successful risk manager needs to be able to prove their industry and market smarts in order to identify potential risks. A lot of firms also look for candidates who understand how global financial markets operate; if you’ve experience with trading floor too, then consider applying to investment banks and brokerage firms, where the risk exposure and risks themselves are comparatively more significant than at other organisations.
General tips for getting ahead
So, what else do hiring managers look for in risk managers? It goes without saying that your analytical skills need to be fine-tuned to a point, but remember, analysis doesn’t always mean numbers, so if you’re interviewing for a position, consider any time you looked into evidence to back up a conclusion.
How do you fare under pressure? In the world of risk management, things can change at a moment’s notice, so be ready to embrace the unexpected. As a result, quick decisions need to be made when it’s all hands on deck and the pressure mounts up. If you don’t mind your mettle being tested, then you’ll fare well as a risk manager.
When it comes to the future, the right risk manager puts a premium on forward-planning and strategy. Not only will they understand the importance of risks and their potential, they’ll have an eye on the wider organisational picture. You’ll work with senior management to meet business objectives, putting in place strategies that serve the company while still safeguarding risks in the process.
With regards to the above, John Palmiero, Senior Vice President at MetricStream, states the following: “Today’s risk professional not only needs to understand their domain but has to understand how risk management can empower the business it serves. Traditionally viewed as a necessary evil to protect against the unforeseen, risk management done smartly can help a business drive ahead into new areas with a full understanding of the risks it runs and, importantly, with the buy-in of the executives as to the potential payback. The risk manager who is able to partner with the business in this way has a successful career ahead of them.”
You’ll be working with a lot of different people from different departments, so negotiation and diplomacy are good skills to have accrued throughout your employment history. In drawing up a risk management policy, you’ll need to negotiate with other departments; what’s possible? Who needs convincing? Who do you need to liaise with during the process?
The helps to cultivate a role which is constantly evolving, as your skills broaden and prowess increases.
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