Risk Manager Salary and Career Facts
Explore the career requirements for risk managers. Get the facts about job responsibilities, education requirements, salary, and job outlook to determine if this is the right career for you.
What Is a Risk Manager?
A risk manager is a financial manager who specializes in offsetting risk. Using their knowledge of finance and higher mathematics, they analyze the needs of businesses and organizations and help them make decisions that lower the possibility of financial loss and risk exposure. For instance, they may develop strategies that guard against major losses that could result from currency fluctuations or commodity price changes.
Take a look at the following table for an overview of how to enter this field.
|Degree Required||Bachelor's degree|
|Education Field of Study||Finance, accounting, economics, or business administration|
|Key Skills||Analytical skills, detail oriented, math skills, communication skills, organizational skills|
|Certification Required||None, but recommended for advancement|
|Job Growth (2018-2028)||16% for all financial managers*|
|Median Annual Salary (2019)||$86,405**|
Source: *U.S. Bureau of Labor Statistics, **Payscale.com.
What are the Responsibilities of a Risk Manager?
A risk manager is responsible for making strategic use of resources in order to minimize the potential for overall losses at a corporation, investment firm, agricultural enterprise or other business. To accomplish this goal, you would use a number of financial hedging instruments, such as futures and forward contracts, bonds, options, credit derivatives and swaps. As a risk manager, you would also invest resources in various markets, including the stock, bonds and money markets, foreign currency exchanges and the commodities and energy markets. You could be responsible for managing operational risks, such as damage caused by a natural disaster or a dishonest employee. In the healthcare industry, you would be concerned with operational risks related to patient safety, medical malpractice and similar issues.
What Skills Would Contribute to my Success?
In order to successfully allocate available resources, you must have a firm understanding of financial theory and interest accrual, as well as how to value forward contracts and price options. An aptitude for mathematics would benefit you in this profession. To determine probable outcomes and determine risk, you would create simulation models and apply mathematical methods, such as statistics, calculus, linear mathematics and matrix algebra and regression analysis. The ability to explain and rationalize your investment strategy to other executives would contribute to your success as well.
What Level of Education is Required?
According to the U.S. Bureau of Labor Statistics, all financial managers, including risk managers, must possess at least a bachelor's degree in finance, accounting, economics or business administration (www.bls.com). However, employers prefer a master's degree in finance or economics or a Master's of Business Administration (MBA). A degree in mathematics may be acceptable for some risk manager positions. If you choose to pursue a risk management career in a specialized field, then a related degree in that field may be accepted. For instance, in the healthcare field, a legal, paralegal or healthcare degree would be appropriate, and in the energy industry, a degree in physics may be acceptable.
You could also complete a certificate program for risk management through a college or university, which could apply toward a master's degree. You may choose to obtain an Associate Professional Risk Manager (PRM) Certificate or PRM Designation through the Professional Risk Management International Association (PRMIA). The Associate PRM Certificate, for new professionals and non-specialists who work with risk managers, would require that you pass an examination covering the basics of risk management. The PRM Designation is for advanced professionals. It requires that you pass four examinations covering finance theory and financial instruments, mathematical applications, and risk management practices and standards of practice and conduct.
What Earnings and Employment Prospects Could I Expect?
According to Payscale.com in 2019, the salary of a risk manager within the 10th-90th percentile ranged from about $55,000 to $144,000, including bonuses. For most senior risk managers, the total pay ranged from about $80,000 to $186,000. Total pay for most healthcare risk managers ranged from about $49,000 to $107,000. For all of the above salary statistics, higher and lower salaries are possible, and salaries may vary depending on where you live.
Employment for financial managers, including risk managers, is expected to grow at an average rate, according to the U.S. Bureau of Labor Statistics, by about 7 percent between 2014 and 2024 (www.bls.org). However, expect intense competition as an excess number of candidates seek available positions. You could improve your job prospects through advanced education or certification.
What Are Some Related Alternative Careers?
As a financial manager, instead of specializing in risk management, you could focus your career in a different area of the field. For instance, as a credit manager, you would be responsible for determining credit ceilings and monitoring collections from accounts that are past due. Alternatively, you could become a cash manager, where your job would be to monitor the flow of cash in and out of an organization, control it where possible and project future trends in the flow. Like risk managers, credit managers and cash managers must have at least a bachelor's degree.