Risk management

Deciding how to think about and manage risk is the difference between success and failure. This is what risk management is about – identifying and mitigating risks as much as possible while still allowing an organisation to make bold decisions.

What is risk management?

Risk is an inevitable part of doing business no matter what industry you’re in or what goods or services you provide. Deciding how to think about and manage risk however, is the difference between success and failure. This is what risk management is about – identifying and mitigating risks as much as possible, while still allowing an organisation to make bold decisions.

An organisation is not created to manage risk. The purpose of most, if not all organisations, is to create value. However, all value creation requires a decision, and all decisions carry some element of risk. Indeed, the bigger the decision, the greater the risk – and the potential reward!

If an organisation can think strategically about risk and then embed sustainable risk management responses into its organisation, it will be better placed to anticipate and respond to future risks and circumstances.

What is the graduate experience like in risk management?

A career in risk management means making a choice about two things: the type of sector and the type of risk.

Choosing a sector means simply deciding if you would like to consult on risk as a consultant at an accounting firm, for example, or manage risk in-house at a corporate. The decision to work for a professional services firm or in-house is a classic dilemma many graduates face.

If you choose to work as a risk consultant, you will have a greater variety of projects across multiple industries and locations. If you choose to work in-house, you will gain greater in-depth knowledge in a specific industry. Either way, your work will differ most depending on the type of risk you manage: operational, financial, compliance or security. These are briefly outlined below:

Operational: all organisations have processes that define their business. For example, manufacturing, supply chain and marketing. It is important to understand if these processes are working well, and if there is a risk of failing to meet management, investor or industry expectations.

Financial: there are numerous financial risks associated with running a business. For example, credit risk, which means failing to make required debt payments; liquidity risk, which involves not having enough cash flow; or market risk, which describes changes in factors such as interest rates, foreign exchange rates and commodity prices.

Compliance: organisations must meet a whole host of regulatory or compliance obligations. This area of risk involves ensuring a bank, for example, makes regular filings to APRA in order to avoid penalties.

Security: ensuring that an organisation remains secure is essential to its operations. With increasing globalisation and technology, combating cyberattacks (for example) is a growing priority.

As a graduate working in any of these areas, your work will typically involve routinely scanning the business environment to identify changes in market factors, competition and trends.

Some graduate risk management roles require a greater level of quantitative analysis, such as scenario analysis or modelling, to understand the potential impact on a line of business or new product. Other less quantitative roles may require you to take a more strategic view of risk and make recommendations for mitigation.

What are your career prospects in risk management?

Risk management provides a solid foundation – you will understand how businesses operate and how they are affected by change.

If you begin as a risk consultant, you may either continue progressing to partner level within your firm or instead move in-house, for example, to a retail or investment bank. Moving in-house may result in increasing specialisation, for example, as a portfolio risk or model validation analyst. Like many other specialisations, if you are working for a large accounting firm and decide risk is not for you, you will have the opportunity to move to other advisory areas such as audit or consulting. A lateral move is easiest earlier in your career.

Choose this if you have:

■ Logical, critical thinking and creative problem-solving skills ■ Excellent quantitative and analytical skills ■ A willingness to understand the world around you.

Interested in this specialisation?

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