What is a risk management specialist?
A risk management specialist is a role appointed within organizations to identify potential risks that might negatively affect the business. This role has traditionally focused on financial risks. But more and more, risk managers are being tasked with identifying potential risks affecting employees, third-party risks, cybersecurity threats and privacy-related issues. As a result, the scope of risk management has grown to include finance, employees, facilities, IT, data and reputation.
The field of risk management specialists was already one of the fastest-growing jobs of enterprise management before the COVID-19 pandemic created new aspects of market risk in early 2020. In the wake of the massive impact of COVID-19 and climate change, companies are increasing the demand for risk management specialists.
Risk managers excel in identifying how things might break. They also must be good at modeling and estimating probabilities of different kinds of risks and setting up processes for addressing problems when they emerge.
Specialists can also prioritize risks to create a competitive advantage. For example, risk management officers can help product managers to pursue new opportunities more efficiently by mitigating risks compared with competitors. They can also help business managers balance potential investments against potential risks.
An essential job for risk management specialists lies in effectively communicating with subject matter experts, frontline workers, managers and executives across the organization. They need to be good at identifying potential problems without exacerbating the issue. They also need to be able to strike a balance between cultivating awareness of problems without killing the enthusiasm for promising new opportunities.
One of the unique skills of risk managers is quickly understanding the greater context of events that affect the business. For example, a risk manager might think about the various ways the move to work from home could affect sales, employee morale, operations, regulations and other factors.
Risk management specialists can also help implement systems to actively connect key risks to important alerts. This can help automate the execution of contingency plans when required. Tighter integration between business applications and decision-making can help improve the quality of risk management across the organization. The focus on blending IT and risk management also brings up the possibility of other types of employees earning risk management certifications.
Responsibilities of a risk management specialist
Risk managers wear a lot of hats. They need to have frequent in-person conversations and email exchanges about all areas of the company so they can keep an eye toward what can go wrong. They need to be able to identify problems in a helpful way that supports morale and the growth of the enterprise. Here are some of the responsibilities tasked to a risk management specialist:
- Connect financial data to specific risks and mitigations, such as insurance or policies.
- Curate data related to various types of risks from within the company and the industry at large.
- Identify and characterize risks through in-depth discussions with employees, customers, regulators and third-party experts.
- Create risk management models for assessing and mitigating various aspects of risk exposure.
- Generate risk disclosure and risk maps to help guide employees, inform regulators and keep shareholders in the loop.
- Keep an eye on emerging regulations that may affect business risk positions.
- Translate the impact of new laws or regulations into practical advice for business leaders.
- Facilitate risk conversation between different types of expertise within the organization, including legal, IT, finance, privacy, HR, health and safety, supply chain management and operations teams.
Essential skills for a risk management specialist include the following:
- financial acumen;
- strong verbal and written communication;
- the ability to summarize complex situations;
- familiarity with statistical analysis tools and techniques;
- the ability to organize information and implement systems;
- the ability to manage cross-specialty teams;
- supply chain management fluency;
- digital risk assessment capabilities; and
- privacy and data protection understanding.
How to become a risk management specialist
Risk management specialists need to start with solid business management skills. An ideal starting point is a business management degree, particularly in financial industries such as banking and insurance. Other types of professionals can cultivate risk management specialist skills by cross-training.
Risk management is starting to cross multiple business and technical domains. As a result, risk management specialists may also come from other business sides that have equally strong skills in identifying problems and creating systems for mitigating their potential impact. Experts in legal, HR, data protection, cybersecurity, and supply chain management may consider a risk management career path.
Critical for a risk manager is the ability to synthesize the context of potential risks across multiple disciplines. There are numerous risk industry trade organizations that provide more comprehensive education and certifications, including the following:
- Global Association of Risk Professionals: Financial Risk Manager
- Institute of Risk Management: International Certification in Enterprise Risk Management
- The National Alliance for Insurance Education and Research: Certified Risk Manager
- Organisation of Certified Risk Managers: Certificate in Risk Management
- Professional Risk Managers' International Association: Professional Risk Manager
- The Risk and Insurance Management Society: Risk and Insurance Management Society Fellow
- The Society of Actuaries: Chartered Enterprise Risk Analyst
Salary and career path outlook
The U.S. Bureau of Labor Statistics (BLS) has identified risk management as an essential element of the financial manager job category, with a median wage of $134,180 per year in 2020. This category represented about 697,900 U.S. jobs and is projected to grow by 15.5% between 2019 to 2020. This means a faster growth than IT management roles such as computer and information systems manager jobs, which will increase 10.4% over the same period.
One factor in these estimates may be that it is more challenging to replace risk management specialists using AI and automation techniques like robotic process automation. In 2018, the BLS commented on the use of AI in risk management, saying, "because the complexity of risk management makes it difficult to automate, artificial intelligence is expected to be a complementary tool, rather than a substitute, for risk managers -- unlike the situation with many other occupations."
In contrast, the BLS predicted a significant drop in many other finance-related jobs. For example, it expects decreases of 8.3% in tellers and 1.5% for bookkeeping, accounting and auditing clerks between 2016 and 2026. Employees in these other kinds of jobs may consider future-proofing their skills to enhance their career opportunities. A risk management specialist is aligned with the skills required for many types of senior executive roles, including chief risk officer, chief finance officer and chief operations officer.