What is Risk Management?
Risk management is the process of identifying, analyzing and responding to risk factors throughout the life of a project. Once these risks are identified, an appropriate technique is implemented and results are monitored. Sound complicated? It can be, depending on the project, but when you think about it, risk management is an integral part of all business processes. It’s essential for limiting profit loss and maintaining a competitive edge in today’s volatile economy.
The Nuts and Bolts of Risk Management
As we mentioned above, risk management is all about protecting a company’s interests. What is a risk you might ask? A risk is any uncertain event or condition that might affect your project. Not all risks are bad. Some risks are actually opportunities that results from identifying and exploring a risk. For example, in the process of identifying a risk, you might uncover an easier way to do an activity, minimizing time and resources. Interesting, right? It is a pretty fascinating process that goes into the creation of new products and services. And for the strategic-minded person, this career path can be both rewarding and challenging.
There are many different techniques used to handle risk, such as:
- Avoid: If you can eliminate the risk in its entirety, do it.
- Transfer: One effective way to deal with a risk is to have someone else assume it.
- Mitigate: This means taking action that to lower the risk as to your project as much as possible.
- Accept: When you can’t avoid, mitigate, or transfer a risk, it’s time to accept it and learn from it.
Each company or organization has its own risk management techniques, but typically, you can expect the above steps to be part of the process in some way shape or form.
Careers in Risk Management
There are many different types of careers in this field. You’ll often find that job titles vary depending on the industry. For example, you’ll likely come across postings for a management analyst, risk analyst, financial manager, just to name a few. These roles often require applicants to have a strong background in risk management, including a degree that prepares you to handle the tasks noted below, as outlined by O*Net OnLine:
- Document, and ensure communication of, key risks.
- Maintain input or data quality of risk management systems.
- Recommend ways to control or reduce risk.
- Identify key risks and mitigating factors of potential investments, such as asset types and values, legal and ownership structures, professional reputations, customer bases, or industry segments.
- Devise systems and processes to monitor validity of risk modeling outputs.
- Gather risk-related data from internal or external resources.
- Identify and analyze areas of potential risk to the assets, earning capacity, or success of organizations.
- Develop or implement risk-assessment models or methodologies.
- Produce reports or presentations that outline findings, explain risk positions, or recommend changes.
- Plan, and contribute to development of, risk management systems.
Remember, if you want to work in risk management, you’ll find that many occupations are similar to that of a risk manager or analyst, such as:
- Accountants and Auditors
- Administrative Services Managers
- Budget Analysts
- Cost Estimators
- Market Research Analysts
- Operations Research Analysts
- Top Executives
If you think you want to work in this field, it’s time to start thinking of earning a degree. You can pursue a bachelor’s degree in business with a focus on risk management or corporate finance. Or if you already have a bachelor’s degree, you might want to consider a graduate degree, such as an MBA or a master’s degree in organizational development. There are many paths you can take to work as a risk analyst or any of the other occupations listed above. Just check out our list of degree programs to find one that suits your interests!