Careers in Risk Management

Below are some of the Risk management careers/jobs that a person can opt for.

A risk management career refers to identifying and assessing risk to make productive investments and alleviate the danger caused by external and internal instabilities. Risk is everywhere in the business and often costs very dearly if taken trivially. In the financial world, this risk management job plays a significantly unique role, as clearly manifested by various financial crises, it grips the economy at large, weakens it, and the shocks are felt in several markets with emerging economies witnessing some serious damages.

The Risk Management Career is one of the most heavily invested and highly regarded areas in the entire organization, simply because of the severity of the industry and its significance in profit building. A risk management job has traditionally played a very important role in syncing the grass-root policy with the firm's growth objectives by being an anchor of progress and an agent of advancement, owing to analytical, research, and modeling efforts.

Some important risk management careers/jobs in the industry are:

Operations risk refers to the possibility of damage resulting from insufficient or erroneous procedures, policies, or processes. It can arise due to system failure, Human error, or any event that can potentially threaten the flow of business. Losses arising from internal/ external fraud, damage to physical assets, system failure, etc., can be termed operational risk. This is very difficult to determine and control compared to other types of risks.

Qualification and Skills Required

• A Masters degree with focus on core subjects such as mathematics, statistics, business finance.
• Additionally, Professional Certifications like FRM, and PRM are highly preferred.
• High statistical aptitude with quick decision-making skills
• A keen learner with the ability to lead a team.

Market risk refers to the possibility of losses arising due to external factors beyond companies' control, such as the risk of economic breakdown or interest rate changes. It is also called a systematic risk and cannot be mitigated through portfolio diversification/minimum variance. Primarily measured using various Value at risk and stress testing methods, it helps companies understand the major risk threatening the markets and their standing.

Responsibilities

• Carry out statistical modeling using VAR techniques to study the possibility of returns and losses from a particular investment, and explore new avenues for potential investment.
• Research sagaciously the market trends, and help sync companies' growth strategy with future estimated movements.
• Prepare reports of such analysis and present it to the stakeholders.
• Liaise with the trading desk and conduct a comprehensive assessment of strategies.
• This career helps build a strong risk management infrastructure.

Qualification and skillset expected

• Masters of engineering degree with a focus on mathematics, applied statistics, quantitative finance, or economics.
• Advanced computing skills with knowledge of programming language.
• Appeared or willing to appear for FRM Exam/CFA.
• Strong reasoning ability with an above-average statistical aptitude.
• A keen learner with a desire to lead a team of researchers.

Companies That Hire

• The big four and all the Investment banks.
• The research and sell/buy-side firms.
• The pension and insurance funds.

Credit risk is the possibility of loss resulting from the borrower's default. Put, it's the risk that the lender may not get back his owed principal and interest amount. At the outset, predicting who will default or fail to meet contractual obligations may not be able to predict. However, appropriately assessing and managing the possibilities can mitigate the potential damages. It is measured based on the borrower's Overall capacity to pay back as per the terms of the contract.

Responsibilities

• Analyze financial, and cash flow statements, thus carry out ratio analysis, liquidity, and rate of return.
• Assess credit inquiries, new requests and conduct due diligence.
• Prepare a report based on these assessments and share it with all the stakeholders.
• Forecast market movements and help sync companies' growth policies with future market trends.
• Make sure companies' policies are in full compliance with the regulatory requirement.
• Stay updated with companies' lending policies, also recommend improvements, if any.
• Reconciling accounts and updating records in the internal systems.

Negatives

• It’s a very stressful job. As a credit professional, your analysis will play a massive role in deciding the rate at which the applicant borrows and whether he gets a full loan or a credit line. The responsibility is huge, and the profile demands a lot of hard work; as such, it can't be taken lightly.

With the advent of new technologies and innovations, businesses today are increasingly exposed to various internal and external threats. As such, they are investing more and more in the areas to prevent losses from such threats and are taking pre-emptive measures on a scale larger than before. As they struggle through the new age business landscape, they want to ensure their shock-absorbing power is second to none, therefore serving this critical area with higher interest.

This has been a guide to Careers in Risk Management. Here we provide the list of top 3 risk management job options, descriptions & career paths, including operational risk analyst, market risk analyst, credit risk analyst, etc. You may also have a look at these Career articles below –

• List of Fixed Income Careers
• Valuation Careers
• A career as a Credit Analyst
• A career in Financial Engineering