Financial risk management is a burgeoning field in banks and lending institutions, as well as business in general. Risk management is one of the most complex and fastest-growing disciplines in the finance arena – gaining impetus and credibility as a roadmap to add business value. Stakeholders are placing emphasized focus on risk management in light of increasingly complex compliance mandates like Basel II and SOX. All in all, it adds up to exciting and lucrative career opportunities now and in the coming years.
Risk Management Roles
Risk management is a critical force that keeps all of an organization’s financial and compliance functions under control. Risk managers evaluate, manage and monitor internal and external factors to reduce associated risks.
Primary areas of risk management include:
- Credit risk management: Assessing the risk of loss if a financial institution’s client is unable to repay a loan. Credit risk managers rank customers according to the risk they pose and advise management on credit approvals and disapprovals, as well as appropriate interest rates.
- Market risk management: Assessing the effects of external events, such as environmental disasters or political upheavals, on market factors. Market risk managers measure the risk posed by such events on daily financial transactions. Standards that may be influenced by external events include stock prices, interest rates, foreign exchange rates and commodity prices.
- Operations risk management: Continuously assessing risk decision making and overseeing all operational risk including the possibility of loss as a result of inadequate or failed processes, systems or human factors.
Risk managers identify, analyze and document the risks associated with a company’s business operations, monitor the effectiveness of risk management processes and implement needed changes including staff and management training. Their job description would likely include:
- Establishing and monitoring key risk indicators and implementing corrective action plans.
- Analyzing transactions, internal reports and financial information for potential fraud risks.
- Creating policies, procedures and control assessments in response to identified risks.
- Implementing and reviewing compliance with regulatory requirements.
Job vacancies in financial risk management have increased by 29.04 percent since 2004 with an average annual growth rate of 4.84 percent. Industry experts predict that 11,760 new jobs in risk management will be filled by 2018.
Educational and professional qualifications include:
- A bachelor’s degree in risk management, finance, economics, business management, statistics, computer science or a related field. One to two years’ experience is preferred by most employers.
- Professional certification is a plus. This can be obtained from the Association of Certified Fraud Examiners (ACFE) or candidates can become Certified Risk Analysts (CRA), earn Certification in Risk Management Assurance (CRMA) or be certified in Risk and Information Systems (CRIS).
- Skill sets in greatest demand include knowledge of internal controls, corporate compliance, governance, and IS security. Also valuable are skills in technology, decision making, judgment, execution, and computer science.
Professionals with ACFE certification earn an average of 30 percent more than other risk management professionals. According to the 2013/2014 Compensation Guide for Anti-Fraud Professionals, the median annual salary for those with CFE credentials is $99,400, compared to $76,300 for those without certification.
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