Risk management is the practice of identification and management of potential risks, analyzing them, and taking preventive steps to curb them. It is practiced by managers and fund investors in order to minimize as well as control their exposure to such risks. When an organization makes decisions for their company, it exposes itself to a number of risks. These can be financial as well as managerial risks and requires immediate action to reduce them. Hence, inadequate management of risks can lead to severe consequences for the company’s economy, organization, and individuals.
Some of these financial risks can be in the form of high inflation, volatility in capital markets, recession, bankruptcy, etc. and not managing risks properly might create havoc on investments in the economy. A project or a team manager has to manage risks on daily basis. For this, he has to learn to apply a systematic risk management process for the efficient handling of the risks involved.
It is very important for any financial manager to take these points into consideration before handling the risks. The companies especially appoint people who are certified as risk managers and can deal with any aspect of risk research, including disaster risk reduction, financial risk, broader environmental change, insurance, health, migration, social policy, risk and governance, and all aspects related to the management of risks.
Students who wish to become risk managers as well as explore the social dimensions of risk and resilience pursue MA and MSc in risk management, financial risk management, Master of Management (Corporate Governance and Risk), Master of Engineering in Risk Management, crisis management, etc. Being a risk manager opens up a lot of opportunities and widens the scope for better management of the company. Over the past 20 years, there has been a significant increase in the number of students pursuing risk management. One of the remarkable outcomes of this has been a stupendous growth in the number of students traveling abroad.
While studying risk management, the students will be taught the proper steps to achieve their project goals. The steps included are:
- Step 1: Identification of the risks - This is one of the most important steps for curbing the risks. Your team has to recognize and identify the type of risk involved that might affect your project outcome. There are a number of ways to find out the risks involved. You just need to identify the right techniques to do so.
- Step 2: Analyzing the risks - After the identification of risks, the next step involves the analyzing of the risks involved. This means that the probability and consequence of each risk is determined and the nature and potential of the risks are clearly understood.
- Step 3: Evaluation of the risks - The third step involves the evaluation of the ranking by determining the magnitude of the risk. Decisions are made regarding the acceptability of the risks and how it should be treated. It is then added to the Project Risk register.
- Step 4: Treating the risk - During this step, a plan is set up to treat and modify the risks involved by assessing all the highest ranked risks. All the negative and positive points are dodged down and risk mitigation strategies, preventive plans and contingency plans are created to treat these risks.
- Step 5: Monitoring and reviewing the risks - In this step, the risk management process is monitored, tracked and reviewed.
In many countries, the time period of risk management courses can range from 6 months to 2 years. During the duration of this course, the students
- Understand the meaning of risk management
- Develop an ability to manage risks more effectively
- Are prepared to make informed decisions
- Create process through which they become Ambassadors
- Delineate institutional responsibilities and student responsibilities
- Work with other students as partners in sharing responsibilities
- Work with Departments and faculties as partners in managing risk
United States, United Kingdom, Canada, and Australia are some of the top countries offering degrees in Risk Management department. The average fees for a risk management course can be between Rs. 16,00,000 per year to Rs. 22,00,000 per year for Risk MA course and Rs. 14,00,000 per year to 20,00,000 per year for a full-time risk MSc course. There are total 230 courses in Risk Management being offered in various institutions across the globe. Some universities offering these courses are:
- Durham University, UK - Risk MA, Risk MSc.
- University of Leeds, UK - MSc in Financial Risk Management
- University of Sydney, Australia - Master of Engineering in Risk Management
- La Trobe University, Australia - Master of Management in corporate governance and risk and Master of Financial Analysis (Financial Risk Management)
- University of Southern Queensland, Australia - Crisis Management
- University of Liverpool, UK - Risk and Uncertainty MSc (Eng)
- University of South Wales, UK - MSc International Security and Risk Management
- St. Johns University, USA - Master of Science in Risk Management and Insurance / Accounting, Bachelor of Science in Risk Management and Insurance, Master of Science in Enterprise Risk Management, MBA - Master in Business Administration in Risk Management as well as Enterprise Risk Management.
- DePaul University, UK - Master of Science in Enterprise Risk Management
- University of New South Wales, Australia - Master of Commerce Specialization in Risk Management
- University of Southampton, UK – Risk Management (Masters in Science)
- City, University of London, UK – Insurance and Risk Management MSc and fast rack MSc., Investment and Financial Risk Management (with Professional Placement) BSc (Hons), Investment and Financial Risk Management BSc (Hons), Project Management, and Finance and Risk (Masters of Science)
- Kingston University, UK - Investment and Financial Risk Management MSc
- Glasgow Caledonian University, UK - International Banking, Finance and Risk Management MSc, Risk Management (subject to approval) MSc, Risk Management BA (Hons), Risk, Resilience and Integrity Management M.S, Risk Management MSc.
- University of Calgary, Canada - Bachelor of Commerce (BComm) in Risk Management and Insurance, Bachelor of Commerce (BComm) in Risk Management Insurance and Finance
One of the most important challenges faced by the institutions are the support services that they require in order to make their cultural and social transitions optimal for study, work and travel abroad programs. For this, these institutions need to be pro-active in the management of risks, both at the level of program and of policy. The programs mentioned above foregrounds the existence of multiple ways of understanding risk and its aspects as well as how to manage it properly.
All the universities have different criteria and requirements for admission in a particular course. The majority of Universities expect their applicants to have a minimum IELTS score of 6, TOEFL IBT as 90 with no component under 23 and Pearson Academic (PTE) as 60, with no less than 56 in each Communicative Skills, even if your native language is not English.
One of the most important things to consider when applying to a university is the state of your finances with your academic scores. While some universities may be slightly flexible with the grade boundaries, there is a possibility that they consider your profile as well as finances before admission. There are a number of scholarships available depending on your academic profile and any other internship done.
Another vital thing to consider when you’re deciding where to study includes the options available at each of the universities alongside the expertise of your skilled lecturers. Although many of the core degree modules may be similar, the optional modules on site will differ between their academic establishments.
Some of the key points to remember while incorporating risk management are:
- Devising a Plan – It is very necessary to devise a plan before managing any risks. Hence, identification is the most basic step for the management of risks.
- Be Pro-active – This approach involves the identification of threats, consideration of options and devising the plans proactively.
- Identify the risks – It involves the proper management of the risks involves using SWOT and PEST analysis.
- Conduct SWOT (Strengths Weaknesses Opportunities Threats) analysis – The analyzing of Strengths, Weaknesses, Opportunities, and Threats is carried out in this step. These Strengths and Opportunities are positive events that promote your goals. Identifying these factors is very important for the planning of risk management strategically.
- Conduct a PEST analysis – PEST stands for Political, Economic, Social, and Technological factors that affect any organization or business. A thorough understanding is required for these factors.
- Prepare your Response – For each risk, the seriousness and potential impact is determined in this step.
- Be Continuous – Management of risks is a continuous exercise. You need to follow the trends and not just move on to something else.
- Take a long-term Perspective - Each management of risks improves your ability to manage more risks effectively and efficiently. Hence, it is very important to keep long-term perspectives.