In today’s competitive business world, companies are often looking for new and improved ways to gain a competitive edge over their competitors. As a result, there has been an increased demand for Business Risk Managers amongst major corporations and industry leaders in the past decade. A Business Risk Manager works with executives and key business decision-makers to understand what risks may or may not impact a company in both the short and long terms. Using this information, they help identify financial risk management strategies that can be used to reduce overall corporate risk and increase profitability while maintaining the strategic direction.
There is enormous pressure placed on businesses by shareholders to meet or exceed stockholder return expectations each year. However, managing your business so tightly that it becomes too dependent on factors such as revenue and profit can also be risky. Therefore, business Risk Managers look externally to identify economic trends that may affect the business. By identifying possible threats, management is better informed when it comes time to make corporate goals and objectives. Some of these factors include:
Changes in supply and demand for specific products or services within a market. New competitors with different business models, pricing strategies, or higher quality products entering the marketplace, causing decreased profits for existing businesses operating in the same space
The business that most closely aligns with this profession is the insurance industry. However, as more and more large corporations look to reduce overall risk within their organization, Business Risk Managers will continue to gain traction as a vital part of an executive team. A Business Risk Manager creates and implements new and improved techniques used by executives today to make strategic decisions based on financial risk management strategies. Some of the specific methods utilized include:
Financial modeling — Offers decision-makers insight into how different variables impact one another over time. Changing one variable can determine what kind of effect that change will have on others, such as cost, profit margins, or sales revenue. This helps management identify potential losses or gains that would be experienced due to the decision they may be considering.
— Offers decision-makers insight into how different variables impact one another over time. Changing one variable can determine the effect that change will have on others, such as cost, profit margins, or sales revenue. This helps management identify potential losses or gains that would be experienced due to the decision they may be considering.
Cash flow analysis: Enhances reliability and assessments by providing consistent data to projects and initiatives that may take years to reach full completion. When coupled with financial modeling, cash flows can help executives make strategic decisions about which risks to take and which should be avoided at all costs, given their current position within an organization’s financial model and overall goals and objectives.
In conclusion, Business Risk Managers provide insight and knowledge to corporate decision-makers allowing them to make better decisions based upon the risks involved in taking specific actions. This is done by identifying and quantifying financial risk management strategies that allow companies to reduce their overall operating expenses while maintaining competitive advantages over rival companies within an industry.
