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Career in Risk Management

January 22, 2010
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In the preceding post we talked about job as a financial analyst. Today we discuss Career in Risk Management.

Overview Risk Management: Within the financial services industry, risk management involves assessment and quantification of business risks, and then taking measures to control or reduce them.

Educational requirements: To work in a career in risk management, a bachelor's degree is the bare minimum, often an MBA also is preferred. Strong quantitative skills are a must.Certifications like the PRM or FRM provide the necessary backing to your resume. A globally recognized certification program puts employees on the same footing. Organizations consider them as a means to ensure that everyone in particular job groups or functions has the same level of experience, knowledge, and ability. Additionally, experience in law, accounting, compliance, insurance and/or operational areas of the financial services industry are important credentials. For example, risk managers who are into securities trading must have intrinsic knowledge of the trading procedures, such knowledge can be best gained from prior experience as a trader or related work in s similar domain.

What's the job all about: Risk management is primarily concerned with identifying and measuring the risks faced by the organization. A broad level categorization could be done as:

  1. Generalists, who cover several different areas
  2. Specialists who concentrate on a single domain

Within the industry, the various categories of risk classification include:

  1. Defaults on loans extended by the firm
  2. Losses on securities inventories held by traders
  3. Losses on investment securities held for the firm's own account
  4. Counter party risk (some other financial organization failing to fulfill your firm's obligations)

Risk management personnel formulate, implement and enforce the guidelines and procedures designed to avoid above mentioned risks. For example, the risk analyst might prescribe limiting the value of inventory held by a securities trader. Risk management personnel also employ various financial instruments and contracts to control risks, such as:

  1. Derivatives
  2. Swaps
  3. Insurance
  4. Options contracts
  5. Futures contracts

The work schedule can be highly variable, depending on the firm and your position. Since risk management is a vital function, risk managers should not be surprised if they are expected to put in around exceed 50-60 hours per week. Moreover, during periods of high market turbulence and financial uncertainty, risk management professionals may be on call round the clock. How does it feel to be one: Risk management is a crucial function, and thus has a great deal of intrinsic job satisfaction. Additionally, positions in this field are well-paid and well-respected. The work can be fast-paced but very stimulating.

Moolah: The median annual salary for all financial managers was $91,000 and the top 10% earned over $132,000 in the US. Within the financial services industry, however, the median salaries for risk managers can even exceed $140,000.


About the Author

Trusted by Fortune 500 Companies and 10,000 Students from 40+ countries across the globe, it is one of the leading International Training providers for Finance Certifications like FRM®, CFA®, PRM®, Business Analytics, HR Analytics, Financial Modeling, and Operational Risk Modeling. EduPristine has conducted more than 500,000 man-hours of quality training in finance.


Global Association of Risk Professionals, Inc. (GARP®) does not endorse, promote, review or warrant the accuracy of the products or services offered by EduPristine for FRM® related information, nor does it endorse any pass rates claimed by the provider. Further, GARP® is not responsible for any fees or costs paid by the user to EduPristine nor is GARP® responsible for any fees or costs of any person or entity providing any services to EduPristine Study Program. FRM®, GARP® and Global Association of Risk Professionals®, are trademarks owned by the Global Association of Risk Professionals, Inc

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