Who is a Financial Risk Manager and How Can You Become One?

The concept of risk management is not something very recent. Ever since businesses have existed, their owners or their accountants have always predicted impending risks to their organisation, found out ways to mitigate them and only those flourished who were successful in early identification and proper mitigation. Now, as the world economy has evolved and companies have diversified, the structure of businesses have become way too complicated to be handled by just one single person. Even the sources of risk have increased in number and this calls for a professional in risk management. And thus, an executive who deals with the financial sides of a business’s risk can take up the chair of a financial risk manager.

So, who is a financial risk manager?

Understand the profile with the help of a simple example. All big businesses issue some form of credit to their clients. The deal generally involves delivering the products/services now and the payment can be cleared by the client later, say after 15 days. Now, two types of risks prevail in this particular situation. One, the delay in payment can create a constraint on the company’s cash flow. And second, if the client fails to pay up, that will harm the company’s revenue. Thus, a financial risk manager of this company analyses such situations way before the delivery is made to the client, find out ways to tackle these potential risks, and advice the company’s executives on what are the best approaches ahead.

As evident, the above example is a highly simplified one. In reality, a financial risk manager also has to deal with market risks, operational risks, and liquidity risks along with the said credit risks. Thus, most companies prefer only those graduates for their FRM post who pass out from the top management institutes in Greater Noida as they possess the financial and accounting skills to tackle the challenges of the profile. As a financial risk manager in a big or a medium scale company, the top brass will be dependent on you to foresee the organisation’s downhills and layout proper plans so that the impacts are minimal.

How to become a financial risk manager?

The current fluctuations in the international financial markets and the domestic economy have made the post of financial risk manager essential to every company. The demand is currently at its peak and naturally, FRMs are one of the highest-paid executives in the corporate arena. To become a financial risk manager, you will have to walk through one of the following paths.

1. Get certification in FRM

The Global Association of Risk Professionals or GARP conducts an FRM exam and this certification is currently the most renowned among all the ones available. Irrespective of your educational degrees, you can sit for this exam and clear two stages of it. Following that, you will have to gather a minimum of 2 years of work experience as a financial risk manager and only then you will receive the certification of FRM. The subjects involved are naturally related to finance and risk management and materials are generally available from GARP itself.

2. Complete an MBA with a finance major

An MBA with finance major from the best management college in Greater Noida is somewhat equivalent to the above certification and preferable by most recruiting companies. By investing time in your management course, you are picking up the financial skills of business operations and corporate accounting required to become an FRM. After completion, you can work in the industry to pick up experience and get a shot at the coveted job. You may have to start as an assistant to a financial risk manager at a medium scale company. But your work experience can propel you to the top post in a big company.

Plus, as an MBA, you will also have the advantage of landing a higher package which will be absent if take route 1. With a bachelor’s degree and certification, your pay scale will be measured as per the degree you hold.

Aspire to become a financial risk manager

For this is a job that is here to stay. Take the right path, enroll in the top management college in Greater Noida, and pursue a career in FRM. Colleges like the Greater Noida Institute of Technology are the right places to start as the curriculum is just right to prepare you for such futuristic careers and even the companies that visit the GNIOT campus for recruitment are some of the renowned ones in the country. With such colleges, your path is almost straight-forward. Work hard during your degree to pick up the necessary skills and gather work experience later to become a financial risk manager.