The risk manager is a professional and well-trained individual responsible for developing and implementing an organization’s risk management policy. It is the responsibility of risk managers to identify the risks inherent in both existing businesses as well as possible new avenues. Furthermore, this manager must assess the likeliness and impact of these risks, and then prioritize them. They must then devise effective and efficient strategies to minimize the probability and impact of these risks. Therefore this manager is always balancing the cost of mitigating risks with the reward received for preventing them. To maximize the progression through the risk management team to the position of risk manager or Chief Risk Officer, an individual should consider earning a risk management certification.
For the risk manager to be completely effective he or she must fully understand the objectives of the organization. The primary function of the position is to design a process-framework to identify and manage risks to these objectives. Risks are inherent in all areas of an organizations operation including sales, customers, materials, financing, distribution, marketing, and human resources.
Some large organizations may provide several different risk managers with access to senior level decision making. The purpose of this is to include individuals in the process who have specific risk analysis skill sets. While it is important that risk experts have training exposure to all types of risk, there are added benefits to some organizations if they utilize specialists. For example, financial risk management and credit risk management are two common specialties that command considerable interest from powerful industries such as financial services and management consulting.
The risk manager is typically someone who has considerable industry knowledge combined with risk management training, including at least one risk management certification. The ability of the individual to be successful in this position is greatly improved if their risk management training is built upon a foundation of other business training. This manager must have exposure to almost all aspects of the organizations operation, and use this diverse insight to implement holistic 360-degree analysis. The risk manager is typically the head of the risk management team, and is responsible for recruiting, interviewing, and hiring a risk management team. It is also the responsibility of this position to manage the lines of communication between the risk analysts and senior officials. The manager must ensure that the senior level follows the risk management policy and continues to consult the risk management team.
The risk manager has to try and be as proactive as possible, while also being able to be reactive when the need arises. By limiting the number of unforeseen events that the company is exposed to, the risk manager greatly improves the firms chances of success. It is the role of the risk manager to conduct scenario-planning and sensitivity analysis when the organization is considering a particular course of action. The risk manager is an integral member of the corporate governance team, and is often one of the few individuals with a risk management certification who has access to senior management. The manager must be aware of all risks that exist both internally and externally to the organization.
The following are the types of risk that the manager can expect to handle;
- Enterprise risk
- Regulatory and operational risk
- Business continuity
- Information and security risk
- Technology risk
- Market and credit risk
The roles and responsibilities of the risk manager include several other important capacities. The risk manager must maintain in touch with the changing risk management landscape. This includes improving and emerging techniques and tools, as well as changing government regulation. Another task is to stay on top of risk management approaches that other players in the organizations industry and market are using, and benchmark the organizations processes against these. In an ever globalized marketplace the benefits of receiving a risk management certification are increasing, and risk analysis science as well as the role of the risk manager can only be expected to grow in influence.