“If you don’t invest in risk management, it doesn’t matter what business you’re in, it’s a risky business” – Gory Cohn, former deputy director of National Economic Council of the US said this, and almost every founder swears by it.
So, if not solving a problem gives you the itch, then you’re probably cut out either to become a founder or a risk management consultant. To be honest, being an entrepreneur is not everyone’s vibe. But helping businesses grow gives a different high to most people.
There are several ways to help businesses. You can guide them through legal struggles or help them protect their data, but if you want to learn about how a business actually gains success, you’ll have to be a part of its core team.
That is possible if you become a risk management consultant. But choosing such a career which is still not too conventional, may make you scratch your head. So, to help, I’ll give you a clear picture of the job of a risk management consultant.
So, what does a risk management consultant do?
Well, the answer is simple. As a risk management consultant, you’ll help assess risks for businesses and advise them on how to navigate through those. Afterall, the success rate of a business increases by 15% with the help of a risk management consultant.
But is it really a child’s play? Absolutely not. As a risk management consultant, it’s your job to identify the exact phases where a business may run into trouble. So, in a way, the whole business’s success depends on you.
However, that’s just not it. You’ll have other responsibilities too.
Let’s take a look at them.
The role of a business risk management
If you become a risk management consultant, your job won’t end at telling businesses how to avert a risky situation. These are some of the other responsibilities that you’ll have to take on:
Identifying & assessing risks
Well, it is already clear that as a risk management consultant, your primary task is to mark the pain points in a business. Another duty that follows this is assessing these situations.
For example, if you’re working at a financial institute that lends money, you’ll be responsible for assessing the risk profile of a client. How? You’ll check the customer’s history for delayed payments, low credit scores, etc.
Based on all the information you’ve gathered, you’ll have to decide if the client is worth taking a risk. It’ll be your responsibility to judge if the client will flee with the institute’s money, and, if there’s a possibility, how can you work around it.
Your evaluation would help the financial institute decide if they’ll lend money to that particular client. Thus, you’ll be handling one of the most critical aspects of decision-making for businesses.
Planning risk management strategies
An entrepreneur or not, we all know that if you don’t take risks, your business will never shore high. Why? It’s because, through these risks, you test the strength of your business, how adaptable it is, and how innovative you can be to turn risks into profits.
If you choose to become a risk management consultant, it’ll be on you to test these parameters. You cannot suggest a founder not to take risks at all. You’ll have to come up with new strategies that will give them the confidence to take on the risks.
Let me explain this in a better way. Remember how we just talked about risky borrowers? Now, you cannot just straight up deny them help. What you can do instead is make sure such borrowers pay within the deadline.
To make sure they do, you can either impose high interest rates on late payments or come up with an unconventional approach that other financial institutes have yet to come up with.
By doing this, you’ll not only save your company from a risky situation but may also pose it as an innovator of a new risk management approach in a crowded market.
Implementing the risk management strategies
When I mentioned that a major chunk of a business’s success rests upon the shoulder of a risk management consultant, I was not kidding. To be completely honest with you, your job title is much smaller than the responsibilities you’re about to take on.
I’m saying this as your task as a consultant doesn’t really end at just consulting. Once you’re done identifying those pain points and drafting a strategy that might help, you’ll also have to stick through the implementation process.
How? By ensuring that the people in charge of respective duties are well-trained and informed about the situation. Let’s take the financial institution into consideration again.
Once you have come up with a solid plan, you’ll also have to train the person who will directly deal with the risky client. You’ll have to make sure that they are informing the latter of all the clauses and the consequences they might face.
This step will make sure that your strategy is getting implemented the right way.
Evaluating & improving your risk management strategies
Once your strategies are out in the market, you’ll have to sit down and closely monitor how they’re performing. It is one of the most important steps of your job, as strategies that do not bring in any results are as good as not having any strategy in the first place.
Now, mind you, I’m not saying that you’ll always have to bring in positive results. You can learn a lot from negative reactions too.
For example, the late fee that you implemented in the deal with that risky borrower was probably too high, so it fell apart. This will teach you how far a client is willing to go to secure a deal. Based on this, you’ll draft your next move. Probably a follow-up deal or extra perks like interest rate cuts for early payments.
Now that you know the responsibilities of a risk management consultant, let me introduce you to the types of risk management consultants.
What is a third-party risk management consultant?
The term is confusing. By third-party risk management consultant, I don’t mean hiring a consultant from a third-party organization. It means a risk management consultant who specializes in identifying and assessing risks involved in deals with an external organization or vendor.
For example, if you have a manufacturing firm and you’re facing an overload of orders, you may think of outsourcing some of your work to a third-party vendor. But if you are an established firm that has earned credibility in the market, you cannot blindly trust everyone.
That’s where a third-party risk management consultant steps in. They will check the background of the vendor to make sure they meet industry standards, deliver orders on time, maintain the confidentiality of the deal, etc.
Almost every business requires a third-party risk management consultant at some point.
What is a global risk management consultant?
You must have already figured this out after learning about third-party management consultants. They are specialists who know best how to deal with risks that occur at a global level.
For example, if you have outsourced some of your work to an international manufacturer and are now facing delays in delivery, the global risk management consultant will get you out of the situation.
They are aware of international laws, trade routes, etc, that will help solve your problem.
Every business that plans to expand to other countries requires a global risk management consultant to ensure that their business setup and operations go on smoothly.
How to become a risk management consultant?
Now that you already know about the role of a risk management consultant, you must be curious about knowing how to become one. Lucky for you, I’ve done all the research.
Educational Qualifications
If you thought you would need ten different degrees to become a risk management consultant, then you’re wrong. A bachelor’s degree would just be fine!
However, you’ll have to select a degree based on the kind of risk management consultant you want to become. For example, if you want to help companies with their legal troubles, you will need a law degree, and if you want to handle the finance side, then you’ll have a degree in accounting or finance.
But a non-negotiable is that you must have a good understanding of business, data analysis, and management.
Some risk management consultants also take up an MBA or some other master’s degree in risk management to get better opportunities. However, it is totally optional.
Skills needed to become a risk management consultant
To become a skilled risk management consultant, you will have to sharpen your soft skills along with your knowledge. It’ll help you adapt quickly to the working style of new clients.
These are some skills that you need to work on:
Critical Thinking
As a risk management consultant, bookish knowledge will only take you so far. Why? Because your degree taught you about what had been done earlier. But to develop your own strategies, you’ll need your critical thinking skills.
Communication
It is one of the most important skills of a risk management consultant. A part of your job includes handling heated discussions between two parties, and to bring peace, you should have some sweet words up your sleeve.
This will only come easy to you if you work on your communication skills.
Adaptability
I said earlier that as a risk management consultant, you’ll have to work with different clients, so you’ll be exposed to different types of working and management styles. That is why it is important that you work on your adaptability skills and become flexible.
Project Management
After communication, if there’s another skill that you should give all your attention to is developing your project management skills. Businesses require risk management consultants for almost every project they take on.
So, you should be proficient in planning, implementation, and execution of your strategies. You remember that we discussed how important each of these steps is, right?
If you are looking for a comprehensive course that packs project management and consulting in the age of Gen AI, then you should consider 10X Consultant’s course on ‘Consulting in the Age of Gen AI.’ It is affordable, suitable for freshers and professionals, and includes real life case studies.
Students find the course helpful for these five reasons:
- It tackles real-life consulting problems
- It teaches the use of Gen AI in consulting
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- It prepares one for consulting interviews
- It also provides with daily AI news and blogs
Career paths for risk management consultants
Now that you know what you need to become a risk management consultant, let me introduce you to the career options you’ll have once you ace your degrees and skills.
Risk analyst
If you plan to become a risk analyst, your main job will be to draft risk radars for business. It means you’ll be studying the internal and external data of the business to identify areas where risks may arise. It is also an attractive job, as experienced analysts make over $100,000 a year!
Operational risk manager
An operational risk manager is responsible for scrutinizing business operations to find out areas where trouble may arise. A lot can go wrong in every day business operations. For example, one can end up hiring the wrong person or get scammed by someone.
If you choose to become an operational risk manager, it’ll be your responsibility to get the company out of these troubles. However, to become an operational risk manager, you might need a master’s degree.
Enterprise risk manager
If you plan to become an enterprise risk manager, your job will be to ensure that the risk management practices that a business has decided to follow are being implemented throughout all divisions.
Adaptability is one of the most important skills you’ll have to acquire as an enterprise manager, as you’ll usually have to collaborate with different departments, including finance, IT, etc.
Loss control consultant
If you have a flair for numbers, then a loss control consultant is a career path that you should consider. Your primary task will be to assess the financial risk of a business which will include insurance liability, retail shrinkage, etc.
Management Consulting
One of the most exciting career paths for risk management consultants is getting into management consulting. Why? It’s because your job won’t be restricted to a particular division of the business, and you’ll be responsible for improving its overall performance.
Management consultants play a key role in a company, and that’s why if you want to become one, you might consider doing your MBA to increase your knowledge and get better opportunities.
Credit risk analyst
Remember the example of the high-risk borrower I shared? It’s a credit risk analyst’s job to do their background check, and to evaluate their profiles. However, that’s not all.
Credit risk analysts also look into real estate deals that a company signs to ensure that all financial obligations have been met and there are no risks involved.
What is the salary of a risk management consultant?
The demand for risk management consultants is growing every year. In 2024, it will become a USD 130 billion industry and the numbers are only set to rise. Therefore, there is a significant demand for risk management consultants, and they are getting paid handsomely.
Skilled and experienced risk management consultants get paid almost $103,186 per year, and some even get paid $140,000 annually.
Risk management as a career
With almost 50 million startups emerging every year, the demand for risk management consultants is only set to grow. But the competition is also growing. Businesses are looking for only the best candidate out there who are aware of the dynamic and constantly changing business landscape.
If you’re considering choosing risk management as your career, you should not only focus on earning reputed degrees but also work on your skills. With that being said, risk management is also rewarding. The salary is only a part of the several benefits that the professionals get.
So, all the best!