How to Be a Better Risk Manager
Whether they realize it or not, all business owners need a good risk manager working for them in their company’s ranks. This understated yet pivotal team member is the one who brings about change. He or she that occupies this role charge themselves with the all-important task of taking their business forward into the unknown.
If you think you can handle the pressure of being a risk manager, then why not become one? Better still, why not become the best one you can be? Here’s how you can do just that.
Become an expert in your subject
You cannot identify risks and figure out if they are worth taking or not if you know nothing about them or the matter at hand. For this reason, becoming an expert in your chosen subject is a must. Well, if you owned a construction business, would you hire a risk manager who had no experience in architecture or engineering? No, you wouldn’t, because you wouldn’t trust their ability to make informed and rational decisions. For this reason, heading to college or university and getting an in-depth in your education is a must.
Alongside your expert knowledge, you should also become well versed in a number of other helpful subjects. These subjects include statistics, business management, and economics.
Learn how to focus on available information
Becoming an expert in the subject that you are employed to manage risks in will not instantly make you a great risk manager, however. You also need to be able to read the information that you see, and you need to be able to focus on available information. Naturally, to stand any chance of garnering success as a risk manager, you have to be able to focus on available information like your life depends on doing so!
When it comes to learning how to focus on available information, try honing your skills by playing the game of poker. As each game of poker that you play goes on, more and more information will show itself. Specifically, it will be information that pertains to cards that have already been dealt and shown. By being able to focus on this information with undivided attention, you’ll give yourself a better shot at knowing what moves to make at what time. Something else poker will you to focus on is long-term value. By focusing on this rather than on short-term wins, you will learn about what it takes to make moves that will help you find success going forward and not just at the time.
By becoming well versed at focusing on the information currently available to you, the risks that you decide to take going forward will be far more strategic and far less based on blind luck.
Understand how to strategize on the fly
In business, things can change at the drop of a hat, and your risk management fortunes will be tweaked and continuously tested as a result of this. For this reason, you have to know how to accept change, and you have to become well versed in thinking up new strategies for success on the fly.
Again, the game of poker can help you in regards to educating yourself in the manner. In most games, you can turn up, play your own game, and get good results. In poker, however, everything is a bit different. When you play this game, in each game that you play, you have to come up with a new strategy for success. What’s more, you have to learn how to tweak your strategy as the game progresses. By learning how to do this, you will find it easier to adapt to certain business situations as and when they happen.
Get to grips with your own personal risk tolerance
Your own risk tolerance, such as how many risks you take in your personal life, will directly impact the kinds of risks you take and manage for the business that you work for. To truly understand this, you should throw yourself into situations where risk is an absolute certainty.
A situation that fits this mold perfectly is investing. By investing in a number of different stocks and markets as an extra-curricular activity, regardless of how much of your money you pour into the venture, you will get a great insight into just how far you are willing to go in certain circumstances. When you take this route, you will also learn a few things about risk management principles. As stated by Kent Moors, these principles include creating and then following a ‘position sizing’ that fits your investing needs perfectly and making use of trialing stops in order to stop you from losing your principles and profits. Once you learn all about these principles and, more importantly, you understand what they mean to you; you’ll be well on your way to understanding who you are as a risk manager.
Get experience with regards to certain tasks
Risk managers face all sorts of different tasks throughout their working days. To become one yourself, you have to know how to handle these tasks. They include developing contingency plans, providing mythologies, seeking opportunities, anticipating costs, and working collaboratively with others. To get experience with these tasks, you should seriously consider interning with a business so that you can be mentored by their current risk manager. Only then will you truly be able to understand what it takes to take risks professionally.
Risk managers do more than just make decisions based off of luck, hunches, and gut feelings. They evaluate situations in a logical sense and then make individual decisions based on their professional perception. If you think you’ve got what it takes to do just that, then go ahead and become a risk manager. When you do, just remember to take the above advice. You need to be an expert in your field, you need to be able to focus, you need to know how to strategize, and you need to understand your own risk tolerance.