Which Type of Risk Job is Right for You?
Risk management exists to support organisations in making the key decisions that will help drive business forward; for every important decision there is an element of risk attached. The risk team helps the business put effective strategies in place to anticipate, manage and respond to future risks and scenarios.
The first thing to decide when choosing to work in risk is the sector you would suit. This simply refers to whether you take on a consulting role at an accounting firm such as one of the Big Four or whether you choose to manage risk in-house at an organisation. A consulting role will give you a more diverse experience, working on projects across multiple industries and locations, while working in risk in-house will furnish you with in-depth knowledge in a specific space. That all being said, the next important decision is the type of risk you opt to work in.
The type of risk that comes under the financial risk bracket you will recognise as credit risk, liquidity risk and market risk. All areas of risk associated with running a business, from failing to make required debt payments to insufficient cash flow and fluctuating interest rates and commodity prices.
Then there is operational risk which covers the various processes that go hand in hand with business, including manufacturing, supply chain and marketing. Operational Risk Analysts ascertain where the weak spots may exist in these and other areas of the business in order to keep up with management, investor and industry expectations.
Operational Risk Jobs
Anything from a system failure to fraud or plain old human error can impact the flow of business, all of which falls under the category of operational risk. Analysts in this area of risk must keep the company’s operational policies in line with regulatory requirements, understand the business well enough to know which areas may prove problematic and communicate that insight across the business.
Operational Risk Analysts should be excellent decision-makers, quick-thinking and possess strong relationship management skills. Many employers will demand a master’s degree and background in mathematics, statistics or business finance.
Market Risk Jobs
This area of risk deals with potential losses eventuating as a result of external factors beyond the organisation’s control, such as economic meltdown or changing foreign exchange rates. Also referred to as systematic risk it is largely measured through VAR (Value at Risk) and stress testing methods, used to identify the major risks threatening the market and by extension the business. A quantitative arm of risk management, Market Risk Analysts utilise their mathematical minds, reasoning and statistical aptitude to carry out statistical modelling to understand the possibility of returns and losses from any one investment and assess the value of new investments. Their role is to help the business build a strong risk management infrastructure by staying one step ahead of market trends.
Credit Risk Jobs
Credit Risk Analysts can also find themselves in a quantitative risk role, bringing advanced computing skills, programming expertise and regulatory knowledge to analyse financial statements, conduct due diligence where credit inquiries are concerned, forecast market developments and ensure the company’s policies are compliant with the set standards. Stakeholder management and a thorough knowledge of the organisation’s policies, accounts and systems are all key factors of credit risk roles.
The financial services sector continues to hold court as the most lucrative area for risk management professionals thanks to an increasingly regulated business environment. The Big Four accounting firms, (PwC, KPMG, EY and Deloitte), together with investment banks and pension and insurance firms are good places for candidates to begin their search for risk management jobs.