Role of a Risk Manager

By Brenda D. Priddy, eHow Contributor

updated: October 8, 2009
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A risk manager is an important to the viability of any business. The two most common
places to find risk managers are in financial markets and in insurance companies. These
two sectors stand to benefit the most from the expertise that a risk manager can provide.
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Function
1. A risk manager works in finance or insurance. A financial risk manager is
responsible for determining what risks are associated with a certain business
venture. An insurance risk manager is responsible for determining what risks are
associated with insuring individuals, ventures or properties.

Risk Assessment
2. Risk assessment is the process that a risk manager uses to determine the
likelihood of loss that's associated with a particular financial process or
individual. The financial risks could include the likelihood that a project might fail,
how much money could be lost, how likely the company would be to make
money from that venture and other similar processes. Risk managers in the
insurance field must measure the risk associated with potential losses. This
could include the likelihood that a person will get sick, a determination of how
much money the insurance company would have to pay when they get sick, and
the types of illnesses that they would be most likely to get.

Budgeting
3. Budgeting is a key component of risk management. Risk managers are often
assigned a role in budgeting because they are the ones who can best assess
what processes and operations are likely to cause financial trouble for the
business. Their role is commonly to define the worst case scenario that a budget
may need to accommodate.

Benefits
4. Risk managers benefit companies by highlighting the liabilities they face on a
day to day basis. The ability to see what risks could occur with new ventures is
an invaluable tool for managers and business owners who are trying to
determine the best path that a business should take. Risk management is also
essential in the insurance field because it helps to determine which insurance
candidates are high risk and what premiums should be charged to each
individual.
 Potential
5. The role of a risk manager can often expand into other responsibilities. In
many cases risk managers are brought on to discuss financial processes
because they have the ability and training to determine what potential losses and
gains can occur from any given process or financial change. It is easy for a risk
manager to move into additional financial positions because of their
competencies with numbers, formulas and financial assessments. Risk
managers in the insurance field can become part of the upper echelons of the
corporate world.

References