What Is the Role of a Risk Manager? (With Duties and Skills)

By Indeed Editorial Team

Updated 17 September 2022

Published 30 June 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

In business, there may be risks, and learning how to resolve them effectively helps companies thrive and prevent losses. Risk management is the concept of developing strategies to prevent and minimise risks in the public or private sector. Knowing more about the role of a risk manager can help you develop professional capabilities to use in nearly every industry. In this article, we explore what risk management is and its various types, learn what a risk manager does, and share the skills of a risk manager to help you determine if it's a career path for you.

Read more: Management Skills: Definition and Examples

What is risk management?

Risk management is a professional career path focusing on strategy, safeguarding, and compliance. Risk management prioritises the identification and assessment of factors that might increase or contribute to the risks and liabilities of an organisation and its assets, including financial, operational or business intelligence. It can also relate to procedures and policies within a company or organisation. For example, an airline looking to save time and money on its checked bag loading procedures might conduct a risk analysis to ensure the new method is safe and has a low risk of injury for its employees.

Risk management covers a variety of categories and your work may depend on the company or organisation you work for. Here are seven risk management sectors you might encounter in your career as a risk manager:

Strategic

Changes in the marketplace or competitive landscape can create risks for companies and organisations. For example, changes in customer habits, advancements in technology or new business competitors can pose different risks. With strategic risk management, you research, analyse, and stay up-to-date on world events, history, politics, and other external circumstances to assess if you need to change your business strategy.

Financial

As a financial risk manager, you are responsible for how an organisation manages and accounts for its money through loans, accounts payable, and accounts receivable. You monitor investments to ensure they're placed in risk-appropriate ventures that help an organisation earn money rather than lose it. Changes to financial markets, like recessions, world events or elections, can create risks, so you work to mitigate, reduce or avert such financial risks.

Legal

Legal risk is a constant for any company, business or organisation, regardless of its size. For example, lawsuits from customers and clients, government entities or other competitors may create or heighten risk levels. As a risk manager with a legal focus, you predict or find legal vulnerabilities, then create and implement policies, practices, and procedures to avoid or minimise risks associated with litigation.

Regulatory

Local and national regulations apply to nearly every business, and changes to them can impact an organisation in a multitude of ways, including financially, operationally, and strategically. For example, a new environmental law or regulation that limits power usage can affect a manufacturing plant and reduce its product output, affecting its supply, potential revenue, and operational hours for employees, all of which pose risks to the company's financial condition. Regulatory risk managers create policies and practices based on regulations and stay up-to-date on laws and general sentiments to anticipate and plan for future operational changes.

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Economic

The economic health of a city, region or nation can create risks for a company, organisation or business. For example, if a national recession happens or a large company in a city closes, this leads to job losses and customers often spend less and make fewer purchases. Economic risk managers observe historic trends in local and world economies, predict future recessions and boom economies, and make projections and suggestions for how a company can sustain itself during economic hardships.

Operational

As an operational risk manager, you protect a company's assets, employees, and data. For example, you might lead analysis on how to operate machinery more effectively and efficiently, research data protection software or create personnel risk procedures for when executives leave an organisation. You often plan for the worst in risk manager roles to best protect a company.

Reputational

Public perception about an organisation can change and how a company gets perceived can influence its risks. For example, product mishaps, employee misbehaviour or unpopular public opinion can alter the perception of the public and create various levels of risk for a company. You help determine what vulnerabilities an organisation has and how to keep a positive relationship with customers and the public.

Read more: A Complete Guide to the Risk Management Process (With Steps)

What is the role of a risk manager?

The role of a risk manager involves primarily risk management. Risk managers research and study models, procedures, and financials to communicate the level of risk to an organisation's leaders. It can be risk assessments for financial and market inquiries or operational and procedural changes. As a risk manager, you conduct research, consider potential outcomes, and make well-informed decisions based on your investigation and assessment. Risk managers are often full-time employees for a specific organisation or company, or work on a consulting and freelance basis.

Many risk manager positions require a bachelor's degree. While postgraduate degrees are not necessarily required, they can help you command a higher salary, gain career advancement opportunities or move into higher leadership roles. Risk managers often study:

  • Law

  • Statistics

  • Science

  • Finance

  • Economics

  • Engineering

  • Business management

  • Risk management

A risk manager can have a variety of titles and work in nearly every industry. Here are some other compliance and risk management positions and roles within this career:

  • Compliance officer

  • Compliance consultant

  • Loss control consultant

  • Environmental compliance specialist

  • Risk and compliance investigator

  • Risk analyst

  • Regulatory affairs manager

  • Model risk specialist

  • Chief risk officer

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What does a risk manager do?

The duties of a risk manager can vary, based on where they work, though common responsibilities often include:

  • Reviewing project proposals

  • Performing risk evaluations and assessments

  • Creating and implementing risk management procedures

  • Drafting business continuity plans to reduce or limit risk

  • Analysing and projecting the financial effects to a company when a risk occurs

  • Understanding various legal aspects related to risk, compliance, and regulations

  • Writing risk reports and insurance, liability or risk budgets

  • Determining the threshold of risk a company wants to take

  • Designing and frequently reviewing health, safety, and operational procedures

  • Working with internal and external auditors to conduct compliance and policy audits

  • Keeping proper records for insurance and claims

  • Promoting risk awareness and training throughout an organisation

The work of a risk manager closely aligns with project management, as risk assessments are an important factor in determining if a project is financially sound or poses any health, safety or public perception risks.

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What are the skills of a risk manager?

An effective risk manager possesses a mix of hard and soft skills to do their job well. If you're interested in pursuing a career in risk management, consider developing or honing these skills:

  • Analytical and quantitative skills: Having a high level of attention to detail is essential as a risk manager, along with your ability to analyse data, trends, and historical events to form conclusions and recommend suggested courses of action.

  • Business knowledge: A wide range of business and commercial knowledge, including legal and regulatory topics, can help you be a strong risk manager. Depending on the industry you work in, a specialised area of expertise is also beneficial, like non-profit sectors, the airline and transportation field or energy and power industries.

  • Organisation: As a risk manager, you may balance more than one assessment or project at a time, so effective planning and time management can help you keep them organised. You also may have to respond to immediate challenges, like a stock market drop, for example.

  • Mathematics: You deal with numbers, dollar amounts, and other data and figures as a risk manager, so basic numerical skills and mathematics are helpful in your line of work.

  • Computer proficiency: From writing reports, using spreadsheets or analysing data, it's important to have computer proficiency as a risk manager. You use various software programs and analytical platforms to assess and determine risks, so consider familiarising yourself with them and learning about new programs, too.

  • Communication and presentation: As a risk manager, you often educate various levels of employees at an organisation. While explaining to managers and coworkers how certain risks affect their department or individual employees, strong oral and written communication skills can help you perform your job well.

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Why is risk management important?

Managing risk is vital for businesses and organisations because it allows you to prepare and protect, whether that be a company's profits, investments, workforce or overall financial health. Here are four specific roles risk managers fulfil for their companies:

  • Detailed analysis: Risk managers give in-depth and comprehensive reports, proposals, and reviews, evaluating all positive benefits and potential negative impacts for executives and leaders to consider.

  • Proactive planning: Risk managers often operate by expecting negative outcomes to best prepare for them or avoid them altogether. They proactively complete policies and procedures, especially for emergent situations.

  • Consumer insights: Risk managers often have a broad knowledge of consumer habits and attitudes by studying market trends and purchase behaviours.

  • Careful study: Compliance and risk managers diligently study laws and regulations to ensure companies operate within industry and government standards.

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