All you wanted to know about risk management jobs!
The Indian risk management companies like Cholamandalam MS Risk Services winning the Risk manager of the year 2007 from Asia Insurance Review Awards is a real milestone achieved by India towards modified efficient risk management practices signaling for a less hazardous working places in Indian industries. Here is a hub which brings forth you various aspects related to Risk management.
What do you understand by Risk Management?
Risk management is defined as 'A systematic way of protecting the concerns resources and income against losses so that the aims of the business can be achieved without interruption'.
Risk management is fast becoming a popular career choice among the people. It is a growing specialization which is being fused across almost all business functions. The main areas where risk management is applicative are listed below-
- Internal Audit
- Information Security
- IT Governance
- Corporate Governance
For instance, if we talk about the insurance industry, risk management is like a tool to identify business opportunities to design and modify insurance products.
Risk Management gaining importance? Here is a study
As per the survey conducted by the Accenture 2013 Global Risk Management Study, it was revealed that almost all the surveyed firms give higher priority to risk management now than two years ago. In total 450 global risk professionals were part of the study, gathering their insights on how the risk management functions are helping the businesses. Risk management is a significant part of any organization's strategic management and so is important segment for overall health of the organization.
Here are some of the important points which were highlighted in the study-
- Risk functions today are fast moving from mere regulatory compliance to delivering business value.
- The study further revealed that now emphasis is being paid to turn enhanced risk capabilities into a tool enabling the broader organization to meet vital strategic and operation goals.
- Looking ahead of 2015, organizations will focus more on picking top risk talent, translating data to insight and taking more proactive approach to regulation.
- In the research, it was found banking and energy companies are most likely to foresee growing risks over the next two years.
- The top risks include legal and business threats.
Further, the report identified four major key actions that are assisting organizations to accomplish their risk capability goals for 2015. These are listed below-
- Deputing a risk staff with high understanding of the broader business.
- Focus on proactive strategies. Since, risk managers have a crucial role in maintaining the organizations health, it is important the risk professionals are highly qualified chosen best among the rest.
- New age risks can be implacable and so it is the need of hour to develop capabilities that match tomorrow’s risks.
- Many industries are keen on bringing changes in their business models, processes, reporting and data structures to better enable effective regulatory solutions. This will bring more transparency and lessen future complexity.
- It is important to focus more on insight than just data and analytics.
Let us take a quick glance on risk management process
Risk managers have a very interesting role to play wherever they serve. What exactly do risk management job entails? What is the risk management process? Here in the following paragraphs, we'll discuss about the risk management process and what all it is about.
It is the initial step which helps the organizations to understand, prioritise and manage risks in order to avert problems and capitalize on opportunities. It involves evaluation and identification of uncertainties occurring to man or environment.
The main purpose of this step is to estimate likelihood and impact of risks. Based on the risk identification step, risk analysis transforms the data information into a rational form that can be further used in prioritization of the risks.
Risk assessment stages are listed below-
- Hazard Identification
- Hazard Identification
- Exposure Assessment
- Risk Characterization
In risk assessment, various tools can be utilized in this phase. For instance, in insurance industry, below listed tools are widely used.
- Elementary Risk Audits
- Safety Related Tools
- Risk Based Audits
Now after analyzing the probable risks and their impact, the third step is the risk treatment. Here, in this phase, requisite actions and mechanisms are implemented to minimize the risks. This is where the real challenge lies. Risk managers or the staff need to ensure the methods and plans are implemented in the right manner taking into account both positive and negative impact.
Monitoring and Review
After the above risk treatment step, risk tracking monitors the status of the risks encountered and progress of the respective action plan. Risk monitoring also involves checking the probability, impact, exposure, and other risk measures. Risk monitoring is an essential step as it ensures that the operations staff, service manager and other stakeholders are well aware of the status of the risks and the implemented mitigation strategies.
Outcome of practicing risk management-
- Heightened accountability
- More emphasis on bigger picture, integration
- New regulatory initiatives
- Established need for better understanding, monitoring of liquidity and correlations
What is it like working in a risk management job?
From the above discussion, it is clear that risk management is a growing field and organizations are taking serious considerations how to further streamline the process. The risk management profession which barely existed 20 years ago is now seen as a career worthy of serious considerations. So how did we get here? Well, risk management solutions, risk measurement techniques, prominent risk management failures and regulatory initiatives are some of the factors adding value to the risk management profession.
So what does an individual do in risk management profile? Risk management job entails the following-
- Collecting internal and market data
- Validating data
- Determining model inputs
Modeling and analysis
- Identify risk exposure and risk factors
- Chart out model limitations
- Decipher statistical analyses
Communication and Reporting
- Identify risk tolerance
- Collect policy and regulatory information
- Compile risk reports, prepare presentations
Risk Management Courses in India
As the risk management education programs gain a foothold, many students are increasingly gravitating towards this field. Some of the popular institutes that are providing risk management courses in India are listed below-
- Institute of Insurance and Risk Management
- Institute of Finance, Banking and Insurance
- Indian Institute of Banking and Finance
- Finitiatives Learning India Pvt Ltd
- Riskpro (providing Risk Management Professional Certification)
If you want to pursue a career in risk management, then it is advisable to have some certification courses under your belt. It adds value to your candidature and your chances of getting hired are enlarged.
Further, educators have noticed that risk managers and other professionals are seeking masters degree in risk management.
What are the requisite skills?
As per the findings in the survey conducted by Accenture, taking into account the importance of the risk management, recruiters are keen on hiring nothing but the best. Some of the desired skills and traits needed to get into this profession are listed below-
- Critical Thinking
- Ability to identify the limitations of the risk model
- Proficient enough to determine the applicability, sufficiency and validity of an existing risk model
- Identifying the sources of the internal data
- Market awareness (products and macroeconomic)
- Effective communication skills
- Strong computer and quant skills (needed in data modeling)
- Solid analytical skills
Finally, how much you can earn in risk management jobs?
People in risk management jobs are well paid. Here, experience plays a key role in determining the pay package of an individual. With less than one year of experience, an individual draws a package of Rs 420,000, with 1 to 4 years of experience Rs 436,645 per year, 5 to 9 years of experience Rs 993,474.