Top 12 Risk Management Skills and Why You Need Them

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Risk management is a must for anyone who aspires to be a leader or a manager. There is risk to be dealt with at all levels of the business, and if a leader is unable to manage the risk, their upward mobility will disappear.

The best risk managers are often unknown because they mitigate or prevent risk. People often only notice when things go wrong, not when things are going right. A business can have 364 days of operation without a problem. But the day a server goes down, there’s a data breach or a stolen laptop – all eyes are on you.

Being a competent risk manager requires awareness and knowledge to uncover potential risks and present them to the people best positioned to solve the problem. A risk manager doesn’t necessarily have to fix it, they just need to present it to the person who can.

What is risk management?

Risk management means being informed and aware of potential risks and what could go wrong – the expected and the unexpected. Risk managers are aware of all forms of risk within their area of ​​responsibility – and beyond, if possible. They know how those risks would affect the business and what actions to take, or what contingency plans should be in place to avoid the problem.

Is risk management a non-technical skill?

Risk management is a very complex and comprehensive skill. He is not a soft skill. There are many types of risks, including compliance, security, operational, and financial. Compliance is a key factor, as there may be few risks greater than clashing with government regulators. They can do far more damage than a hacker or outdated software.

Risk managers must constantly study, learn, adapt and implement new regulations as they come – and they keep coming. Proactivity is the hallmark of risk management. A reactive approach means dealing with the problem after it becomes one. Risk managers need to stay ahead of the game.

Risk managers need a number of skills to be successful. Here are some of those skills.

How to become a good risk manager?

Good risk managers need several skills. Here are some of those skills.

1. Analytical skills

Risk managers need analytical skills to collect data and make important decisions using that data. They should also spot flaws and weaknesses that others may have missed in systems, infrastructure and other areas.

2. Problem solving skills

Risk managers must also be able to solve problems. While some risks may require passing the news on to someone above their pay level, some will be resolved by the manager. They must therefore like to get their hands dirty.

3. People management and leadership skills

All the problem-solving skills in the world are useless if managers cannot wake the troops. Risk managers need the right people and leadership skills to inspire and lead people. Managing risk can require turning the basket of apples upside down, and managers need their team’s respect through challenges.

4. Relationship skills

This goes hand in hand with the previous skill. Risk managers need to be able to build relationships, and not just with their immediate reports. They should be able to build relationships with other departments and superiors.

5. Financial literacy

Risk managers need to know the average cost of network outages and security breaches. Financial risk is what will grab everyone’s attention. Managers need to know the costs of lost productivity, lost income and financial penalties, the latter of which can be crippling.

6. Knowledge of regulations

If there is one thing the government does well, it is regulation. Regulations are constant and changing. Risk managers should invest their time in keeping abreast of all changes and understanding these updates.

7. Business understanding

To identify and estimate the risks to a business, risk managers need to understand how the entire business works. They can’t say finance doesn’t matter because they’re in IT, or vice versa. Understanding the business is essential, especially if the risk manager has aspirations for the C suite.

8. Ability to quantify risks

After making a list of potential risks, risk managers should be able to rank, on the scale of their choice, the likelihood and severity of each risk. They should have a complete list that notes the most likely to least likely risk and most serious to least serious risk. This will determine the direction of the risk manager.

9. Ability to choose a mitigation strategy

There are four main types of mitigation action or strategy, according to the Skills You Need site:

  • Acceptance. It means accepting the risk and not taking any action to mitigate it. This is for risks that will have only a small effect or are unlikely to occur.
  • Avoidance. This means doing everything possible to avoid the risk. It is for the catastrophic risks that are almost certain to occur.
  • Limitation. This is the most common mitigation strategy, which aims to limit either the probability or the effect of risk.
  • Transfer. It is the transfer of the risk to someone else who is willing to accept it. This is used in areas outside the core competence of a risk manager.

10. Strategic thinking

No sports team ever wins by playing just defense – and that also applies here. If a risk manager takes a look at how things affect the business as a whole, they might find a better way to operate. Their job is to see the big picture, and they might see something that others are missing.

11. Adaptability

Risk management requires constant education and constant updating. Ten years ago, no one had heard of ransomware. Today, it is one of the biggest threats businesses face. News sites and industry journals should be regular reading materials.

12. Mathematics

Risk management involves a lot of numbers and analysis. It requires fluency with numbers and calculations. There are many analysis tools available, including Microsoft Excel, which can help you estimate costs.

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