Risk Management 101: What It Is and Why It’s a Crucial Need in the Market
The process of identifying, analyzing and controlling or minimizing threats, the field of risk management has become all the more vital on the heels of the Covid-19 pandemic.
An understanding of risk management is no longer a specialty for niche careers, as leaders throughout a company are now expected to have some skill in managing risks, said Mark Beasley, professor of accounting at North Carolina State University’s Poole College of Management and director of the school’s Enterprise Risk Management Initiative.
“Risk management is systematically assessing uncertainties about what you think about the world and, especially, the future of the world,” said Sam Field, vice president of enterprise and risk management at RTI International, an independent, nonprofit research institute dedicated to improving the human condition. “If they play out in a way different from your assumptions, it might interfere with your ability to achieve your business goals.”
In a nutshell, risk management means using data about potential risks that can affect a business (in a positive or negative way) to create plans to mitigate and manage those risks. An effective enterprise risk management strategy coupled with exceptional data analysis will allow businesses to stay a step ahead.
“If you picture your dashboard on your car, you’ve got all kinds of indicators on there,” said Beasley. “If your tire light pops on, it doesn’t mean you have a flat tire now; it just gives you an early signal that you need to check it. Maybe you have a nail. Maybe tire pressure is low. For a business, you have a pretty busy dashboard.”
Risk management should be forward-looking by asking what is on the horizon, not just this year, but for 2030 and 2050, said Beasley.
While the pandemic has created obvious tremendous disruptions, there have also been knock-on effects, or secondary issues, that have come as shocks.
“It’s been humbling to see how our assumptions of the future didn’t really pan out,” said Field.
That’s why it’s valuable to question assumptions and brainstorm, even if an outcome seems implausible.
“This experience has shown us it helps to think about what could come next after the initial problems of a lockdown,” said Field. “We find ourselves quite busy in working with our clients on the next things that could go wrong.”
Covid-19 isn’t the only cause of upheaval in today’s world. There’s also political unrest, geopolitical shifts, trade with China, conflict regarding the U.S. elections, cybersecurity threats and ransomware, said Beasley. Plus, with the tremendous speed of change in the modern world, risk management is only going to get more complex. Companies will need to analyze data effectively to get insights into emerging risks.
To address the increasing demand for risk management expertise, the Poole College of Management has created a new graduate degree opportunity: the Master of Management, Risk and Analytics concentration.
The new offering could signal a shift in how the business world will operate in the future.
“This new concentration is targeted to really give people extensive graduate education on risk management, techniques and data analytics capabilities,” said Beasley.
The MRA builds upon the extensive engagement the Poole College has had with risk management executives in organizations across the U.S. and the world through its ERM Initiative, a globally-recognized center for thought leadership and research.
“The new Risk and Analytics concentration will allow business leaders to advance the depth of their knowledge and skill to help organizations enhance their risk insights for strategic benefit,” said Beasley. It’s suited for any business professional, including those who are or want to be in a leadership role. The graduate program is online and designed to be done on a part-time basis in an asynchronous learning environment. Students can complete their coursework and engage with faculty at any time while traveling or living anywhere in the world.”
Poole College’s new master’s program is the school’s latest initiative to meet and anticipate the needs of the business world. Led by skilled instructors with real-world experience, graduates of Poole College have found success in everything from small startups to Fortune 500 companies.
Interested in a career in risk management? Click here to learn more about the Master of Management, Risk and Analytics (MRA) program at NC State’s Poole College of Management.
This post was originally published on WRAL here.