“An ounce of prevention is worth a pound of cure.” This sentiment is the reason that risk management exists. In global markets that are increasingly marked by volatility and subject to complex social, political and economic change, risk management is more crucial than ever to keep companies out of the red and into the black. Risk management teams identify, evaluate and prioritize risks and act to minimize and control adverse events or maximize opportunities that come with disruption.
Over the last decade, in the wake of the global financial crisis, risk management has become increasingly important to help protect financial markets and prevent firms experiencing further fines and sanctions. A report by Boston Consulting Group says that banks across the world have paid about $321bn in fines in the decade following the 2008 financial crisis. Important trends suggest that risk management is set to experience even more sweeping change in the next decade.
A recent report by McKinsey & Company explains how the role of risk management will change in the coming years. Today, about half of the risk management employees are dedicated to risk-related operational processes such as credit administration, while 15% work in analytics. The reports forecasts that by 2025, these numbers will be closer to 25 and 40%, respectively.
The US Bureau of Labor statistics anticipates job growth in the field of risk management at about 19% through 2026. This is significantly faster than average for all occupations. Selby Jennings has partnered with RiskMinds Americas to explore the challenges facing the financial services industry and how risk teams can prepare for the future. The Global Association of Risk Professionals explains how Risk Management is evolving as digitization, automation, and externalization are becoming vital trends in the function within banking. Data breaches and cyber-security is a growing problem in all industries, particularly financial services, increasing the need for good risk management teams.