Risk management in finance: graduate area of work
Risk managers act on behalf of financial services organisations as a front line defence against loss. Their aim is to make sure that companies do not exceed their financial limits, and that they stay within their set business parameters.
‘People think everyone working in risk is boring – like Ben Stiller’s character in Along came Polly – but this couldn’t be further from the truth,’ says Phoebe, a graduate risk consultant at Nationwide.
‘It’s exciting being actively involved in the strategic direction of a business. Since the credit crisis, effective risk management has really come to the fore and will continue to be an essential part of running a safe and secure company.’
What types of risks do graduates manage?
They evaluate a variety of different types of financial risk, including:
- market (eg risks arising from interest rate fluctuations)
- credit (also known as default risk)
- liquidity (eg whether an organisation has sufficient cash flow and whether assets can be sold for profit or to avoid making a loss)
- operational (eg risk of processes breaking down)
- health and safety.
For instance, in insurance risk roles might involve advising insurance organisations on the purchase of insurance or building safeguards to protect the profitability of the business if things go wrong.
A risk management role will equip you with a broad knowledge of industry processes, putting you in a good position to progress to executive level in other areas. Salaries for experienced risk managers are on a par with other finance executives and in 2012 it was reported by consultancy Mercer that professionals working in risk management and compliance were receiving above average pay increases.
Have I got the right degree for a graduate risk management role?
An industry-relevant degree, such as one in business, law, economics or management, for example, is often expected – although some employers will employ graduates from all degree backgrounds.
Many companies also want to see proven experience in the industry (particularly for insurance risk roles), so undertaking an internship or work placement will stand you in good stead.
How do I start my risk management career?
The most common entry route is to join a rotational graduate scheme, which gives you the opportunity to try out different roles before specialising later on. Schemes can be found with most finance employers, such as insurance companies, building societies and investment banks.
You’ll usually start off as a member of a small team; tasks vary from meeting clients through to evaluating risks, writing reports and making preventative recommendations. Phoebe works in capital forecasting (to minimise credit and liquidity risk): ‘My role is to ensure that the group has enough capital to cover any potential losses,’ she says.
‘I coordinate departments’ predicted sales balances and generate a forecast of the risk-weighted assets the group will hold, based on five-year market assumptions. I collate these forecasts against different scenarios and produce models. I also liaise with other divisions to improve the forecasting process and deal with any queries that arise.’
Depending upon your career aspirations, you’ll have the opportunity to study for professional qualifications and specialise in particular areas such as technology or fraud.
What skills do I need to work as a graduate risk manager?
Specific technical or numeracy skills are needed for some risk management roles; all roles require excellent relationship-building and communication skills. You need to be confident, diplomatic and flexible with the ability to react quickly to changing circumstances. A thick skin, an inquisitive mindset and attention to detail will also benefit you.
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