Risk Management as a career option: All you need to know
Risk is an inherent part of modern-day life, and it happens to be all-pervasive at both a micro and macro level. Risk management has thus become a natural imperative in a post-pandemic crisis world, especially for business continuity. Many companies across the globe are battling for survival by creating a risk-proof ecosystem and finding alternative avenues for business growth. Before we delve into why a career in risk management is a suitable path for many young professionals, we have to understand what risk management is and why it is so important.
Risk management was traditionally done by transferring risks to an insurance company or limiting the scope to financial risks only. Every crisis has reminded organisations of the increasing importance of an enterprise wide assessment of risks that involves identifying, assessing and responding to risks across all verticals of the business. Simply put, risk is defined as the possibility of a bad outcome that could throw a company off course from its financial and non-financial targets, or even lead to a complete shutdown. Hence, enterprise risk management is a process implemented by people in strategy setting and management of events, thereby giving an overall assurance on the achievement of objectives.
With economies across the globe facing a synchronised slowdown, and the current pandemic underscoring the importance of protecting organisations against future uncertainties and threats, the need for robust Enterprise Risk Management (ERM) has been thrust into the spotlight. It covers all areas of risk management, including defining risk management policies, setting up the risk appetite of an organisation and framework of risk management and most importantly implementing a risk culture that fuels risk-based decision making.
The role of a risk-intelligent professional is highly complex and demands a wide range of skills – complex problem-solving, analytical thinking, decision-making and judgement based on interconnected events that could have domino effects; negotiation and diplomacy to be able to manage and deal with multiple stakeholders; working under pressure especially during crisis management and lastly, financial literacy and business understanding.
Road to being a risk manager
There are professional qualifications available for anyone after grade 12 alongside graduation / post-graduation or work. As risk impacts all sectors, and all departments, functions and roles across an enterprise, professionals from various industries and departments can also add value to their existing roles through formal enterprise risk management qualifications. Typically, the path to becoming a skilled risk professional includes completing multi-level qualifications, which also provide globally-recognised designations at the higher levels, and which equip individuals with knowledge of global risk frameworks, tools and techniques for identification and assessment, and management of risks across sectors.
ERM applies to all sectors, including automotive, pharmaceuticals, finance, telecom, retail, banking, e-commerce, IT; ITES, real estate, energy, FMCG and manufacturing, hence a qualification in enterprise risk management offers individuals the opportunity to become a risk-intelligent business leader in any organisation.
Professionals can work in different capacities as Risk Management Analysts, Associate Risk Managers, Risk Consultants, Credit; Risk Heads and potentially, Chief Risk Officer. Risk permeates all functions and departments of an organisation, and hence knowledge of risk management is an advantage in any career. The following qualification have been selected from a list of many others, and give an edge when embarking on the risk management career journey – Enterprise Risk Management, Financial Risk Management (for those looking at a career in financial services), Digital Risk Management Qualification (for cyber security professionals), and Supply Chain Risk Management Qualification (for those considering or pursuing a career in supply chain).
The way forward: Future for risk professionals
There is already an uptick in the number of top companies who have or are hiring Chief Risk Officers (CROs) and other qualified risk professionals, to set up risk teams. As a valued advisor on future strategy and potential crises, the role of CRO will become extremely powerful and highly sought- after. Organisations are expected to recruit mid-senior to senior professionals with paycheques ranging from INR 15 lakhs to INR 40 lakhs, as more companies invest in risk management.
The present uncertainties have highlighted the need for organisations to be agile in the face of unpredictability, and risk professionals are going to be in high demand, as an increasing number of organisations transition to a risk culture.
(The author is Hersh Shah, CEO, India Affiliate of Institute of Risk Management (UK). Views are personal)