8 Facts about Risk Managers

Last Updated on September 1, 2024

Certain careers carry more risk than others. For instance, being a firefighter is much riskier than working in an office.

In the business world, risks are events or circumstances that threaten the company’s operations, profitability, and reputation. Every person who works at a food and beverage company helps to manage risks to a degree. Whether it is a production worker following safety precautions or a purchaser who ensures the company buys from a company that gives the best deals every person plays a role in managing risk.

Navigating company risks can be quite challenging without proper leadership. That’s why having a leader who can offer guidance is crucial. This is why companies choose to employ professionals called risk managers, who can adeptly identify and mitigate risks. These individuals adeptly identify and mitigate risks.

1 . Risk Managers identify risks

Food industry risk managers are responsible for identifying potential risks and helping to manage them for organizations. Potential risks that could affect a food business include:

• Supply Chain Risks: Availability of key ingredients could be impacted by factors such as poor harvests, political instability in supplier countries, or logistical challenges.
• Financial Risks: Rising costs of ingredients, labour, or energy can squeeze profit margins.
• Market Risks: Shifts in consumer preferences or competition can affect sales and revenue.
• Cybersecurity risks: Unauthorized access to sensitive customer or operational data can lead to financial loss and reputational damage.

Risk managers use specific measures like key risk indicators (KRIs) to evaluate possible risks such as problems with getting supplies or equipment breaking down. They monitor important information, like how long it takes to get deliveries or how well the equipment works. This helps them spot issues early and take steps to fix them so that everything runs smoothly and safely.

In addition to monitoring risks, Risk Managers are responsible for making strategic decisions to address identified risks. This involves evaluating the severity of issues, investigating their root causes, and collaborating with various stakeholders, including maintenance teams and suppliers. Risk managers assess and recommend mitigation strategies, such as upgrading equipment or revising maintenance protocols to minimize operational disruptions and maintain productivity.

Risk Managers also engage in market research to understand external factors that could impact the organization. Analyzing market trends, geopolitical risks, and competitive dynamics provides valuable insights for strategic planning. They work closely with senior management, presenting data-driven reports and guiding decision-making processes to address and manage risks effectively, ensuring the organization remains resilient and adaptable.

2. Risk Managers monitor risks

Once a risk manager identifies a risk, they begin to monitor its impact on the company. There are various types of risks, but generally, risk managers attempt to quantify risks by using metrics such as key risk indicators (KRIs). A KRI is a way to measure how likely it is that something bad might happen to a company and its impact if the risk were to happen.

A risk manager at a cookie company might identify that ingredient shortages can pose a real risk to their operations. It could halt their operation if they don’t have enough of a particular ingredient. Once they’ve identified this risk, they can start monitoring their suppliers’ delivery times to handle this issue. By establishing a KRI, they can pinpoint unreliable suppliers and take necessary action, such as instructing the purchasing department to stop buying from that supplier and seek alternative ingredient suppliers. In this case, the KRI revolves around the delivery times of shipments from suppliers.

3. Risk Managers have to make decisions

Managing risks is an ongoing and iterative process. Once a risk has been identified and adequately monitored, the risk manager must decide on the best course of action if the risk becomes too high. For instance, if a cookie company finds that equipment breaks down too often, this could be the steps that a risk manager may take:

1. Assess the severity and impact:  A critical piece of equipment, the dough mixer, began experiencing frequent breakdowns. This issue threatened to disrupt production and affect product quality.
2. Investigate the root cause: An investigation reveals that frequent breakdowns are due to poor maintenance practices and outdated machinery.
3. Engage stakeholders: The company consulted with maintenance teams, equipment suppliers, and engineers to address the issue and find a solution. They also communicated with production staff to gather insights on the operational challenges caused by the equipment malfunctions.
4. Evaluate mitigation strategies: Options considered included upgrading to a newer mixer model, enhancing the maintenance schedule, and retraining staff on proper equipment use. They considered both short-term fixes and long-term investments to ensure consistent production quality.
5. Make a decision: The company decided to invest in a new, more reliable mixer while implementing an improved maintenance protocol for all equipment. This decision aimed to reduce downtime and ensure smoother operations.
6. Monitor and review: A monitoring system to track the performance of the new mixer and regularly review maintenance records. Ongoing evaluations ensured that the latest equipment and practices effectively mitigated the risk of breakdowns.

Overall, making decisions involves considering many different factors, which can make the process quite complex.

4. Risk Managers have business degrees

The education necessary for a risk manager will vary depending on the scope and the size of the company they work for. Many risk managers have bachelor’s degrees in finance, economics, or business administration. In Canada those looking to stand out may choose to become designated as a Risk Management Designation. The CRM designation is a widely recognized qualification providing risk managers with the knowledge and skills to identify, assess, monitor, and limit risks. The Risk and Insurance Management Society (RIMS) awards the CRM

5. Risk managers teach others on ways to minimize risks

Risk managers play a vital role in fostering a culture of organizational risk management and compliance. They aim to instill a common understanding of risks and their mitigation, such as being cautious not to click on links from suspicious emails. By teaching and assisting employees at all levels, risk managers help employees to minimize risk. Risk managers often hold training sessions and workshops to explain to employees why thinking about risks and following the rules is important. They also collaborate with different departments to make sure everyone considers potential risks when making decisions.

6. Risk managers conduct market research

Companies face many risks from external sources. Risk managers conduct market research to understand potential market developments and their impact on the company. This research helps them identify geopolitical circumstances, monitor competitor activities, and stay informed about regulations and trends that could pose challenges for the business.

Risk managers can make informed decisions and develop plans to mitigate potential problems by analyzing market data and gaining insights. Market research also enables them to identify new opportunities and areas for company growth while keeping them informed about market developments, allowing them to adjust their plans accordingly.

7. Risk Managers work with upper management

Risk managers play a crucial role in safeguarding entire companies, which requires them to work closely with upper management. They collaborate with senior leaders, providing them with essential data and insights to inform critical decision-making. By developing comprehensive reports, risk managers equip the leadership team with the necessary information to make well-informed strategic choices. Additionally, they offer guidance in addressing and mitigating identified risks, ensuring that the company remains resilient in the face of potential challenges.

8. Risk managers have strong math, presentation and leadership skills

Being a risk manager demands a diverse range of skills, but some are absolutely essential. These skills are not just beneficial, they’re crucial for success in this role:

• Math skills – A Risk Management Analyst often needs to work with numbers and data to understand and evaluate potential risks. Being good at math helps them analyze numbers and understand probabilities, which allows them to create accurate risk models and make well-informed decisions.
• Presentation skills –Risk managers need to be able to explain complex information in a way that everyone can understand. Good presentation skills help them share their findings and suggestions clearly and convincingly with others.
• Leadership skills –Risk managers must motivate and inspire others in an organization to uphold identify and manage risks. They are proactive, lead by example and establish a clear view of what an organization’s risk management goals and strategies are.