How to Learn Risk Management Skills

We can all agree that life is full of risks. There are always many risk factors that come into play when making decisions. This is especially true in the financial sector. When dealing with finances and capital, it’s crucial to stay vigilant with risk management.

While you can’t avoid outright unfortunate events, there are ways to mitigate losses, risks, and other unfavorable outcomes. Either way, it’s only a matter of time until certain risks occur, so you need to prepare yourself by learning risk management skills. 

But how do you learn effective risk management skills? Let’s break it down step-by-step, starting with the basics, before getting to some of the best online courses in risk management.

What Is Risk Management?

Risk management is the different ways companies and individuals assess, plan, and anticipate risks following the execution of a business decision or the implementation of new programs.

Identifying risks can be relatively simple in some instances but extremely risky in others. For example, if a company were to create a risk management plan, they might not account for a looming economic depression.

There are different levels of risks, from minor clerical errors to instances that can bring a company to its knees, financially and legally.

An effective way of planning for failures or risk mitigation is by plotting a ‘risk map’ or an overview of what success or failure can mean for a company’s future. Creating a risk map is a fantastic way to use data analysis skills to form a real picture of potential risks.

What Is Risk Management Used For?

There are several vital topics in risk management. While it’s generally used to effectively plan for unfortunate outcomes, there’s more to it than that.

• Mitigating risk. No business can make a 100 percent foolproof decision all the time. This is where the practice of mitigating risk comes in. Mitigating essentially means making a problem less severe. If something unfortunate and unforeseen happens in a business plan, the only option is to mitigate risk with the assistance of a financial risk professional.
• Protecting companies as well as employees. Risk management is more nuanced than identifying an economic risk and planning for it. Risk analysis provides legal safety nets for businesses and their employees. 
• Help companies reach goals. Overall, risk management and risk analysis is all about damage control and coping with the worst-case scenario. Practical risk analysis can lessen the blows of economic downturns and provide companies with robust frameworks to continue a successful business.

Types of Risk Management

Let’s examine a few of the many risk management types and how they assist companies in protecting assets.

Market Risk

Market risk is one of the more prominent types of risk to watch out for. It’s also called systematic risk. Market risk entails an investment becoming a liability. 

If you invest a lot in a particular decision of a company, and that investment turns sour, you can run into a lot of problems. It mainly ties into the overall status of how the markets are doing regarding your investment.

This is especially problematic if a company or individual invests a large amount of capital in one thing. If that product or company fails to return a profit, especially during a market crash, you can potentially face financial troubles.

Risk and reward play a large part here, as an investor can still buy a large amount of stock knowing full well it’s a risky endeavor. However, they may see that the reward is worth the overall risk.

Liquidity Risk

Liquidity risk refers to any financial risk tied to liquid assets when you convert their value into cash. You will find strong examples of liquidity risk in the real estate market.

For example, you may run into liquidity risk if you attempt to sell your home in a terrible housing market. Also, note that liquidity risk became more prevalent after the global financial crisis in 2008.

Project Risk Management

Project risk management is the act of planning to mitigate failure when a project’s success faces uncertainty or misfortune. This can be extremely detrimental to product launches, software development, and web design.

A loss of investments, capital, and other aspects can temporarily halt or permanently stop the project.

Learning Risk Management

Now that you know some types of risk management and how it fits into the narrative of financial success and failure, let’s move on to how you can go about learning the ins and outs of risk management. 

How Long Does It Take to Learn Risk Management Skills?

It takes a few years to obtain concrete risk management skills. While learning to code with something like Python can take a few weeks to pin down, something as nuanced as risk management may take a lot longer.

Risk management has many intricacies, and people will often need to engage in extensive education to achieve the status of a successful risk manager. However, there are specific ways to expedite your journey and assist you in this learning process. 

Things like internships and online courses can help you achieve the position of a risk manager or risk analyst.

How to Learn Risk Management: Step-by-Step

While you can enroll in community colleges and universities for risk management classes dealing in finance, there are a few other steps to help.

1. Familiarize yourself with finance and risk. You won’t have any hope of a career as a successful risk manager if you don’t know a thing about finance. Understanding financial markets and how investments affect portfolios plays an integral role in learning risk management.
2. Study materials. Risk analysis and risk management have been around seemingly forever. That allows you to use many resources, like blogs, forums, and books, to enhance your knowledge. Use these resources often.
3. Take a risk management course. Online risk management courses introduce you to the fundamental concepts of the practice. While they may not give you a degree, the lessons that some of these paid and free resources can bestow are invaluable. 
4. Get certification. Getting certified in a field or subfield of risk management can improve your chances of getting hired in the financial sector. Certifications let hiring managers and potential employers know you understand risk management areas well. For example, earning a certificate in market risk management is a fantastic way to show you know about mitigating risk when it comes to investing.

The Best Risk Management Courses and Training

Now let’s explore the best risk management courses and training you can find right now.

Best Online Risk Management Courses

Attending online courses is a fantastic way to learn the crucial basics and advanced techniques in risk management.

Risk Management

• Provider: Udemy
• Time: 1 hour
• Prerequisites: None
• Cost: $20

This course is a general survey of risk management, showing newcomers and established professionals what the financial sector and effective investing can accomplish. There are eight sections and 26 lectures. Each video lesson is short yet brimming with useful knowledge.

The course caters to quality managers and anyone interested in risk management. 

Practical Project Management (Earn 16 PDUs)

• Provider: Udemy
• Time: ~9 hours
• Prerequisites: None
• Cost: $140

This course from Udemy covers a lot of aspects. However, don’t let that intimidate you. This course is perfect for beginners and advanced professionals already entrenched in risk management. It’s never too late to learn new financial strategies.

Throughout 68 distinct sections and 208 lectures, participants get a definitive end-to-end look at risk management. The lessons guide you on customer relations, analyzing what went wrong if something fails, and smart investing. Most importantly, the course explores ways to mitigate risk better.

Risk Analysis Forecasting Tools

• Provider: RIMS
• Prerequisites: Have a financial job or exhibit knowledge in beginner risk management.
• Cost for RIMS Members: $395
• Cost for Non-Members: $525

This intermediate course from Risk Management Society (RIMS), offers existing risk managers and professionals the opportunity to improve their forecasting skills. This is perfect for constructing risk maps and seeing which way the market goes.

The key to effective risk management forecasting is through the use of data analytics. In this course, you will get a better idea of how crucial data is in the world of finance. Data samples can be used to predict the sales of an item at stores and how well a company’s investments will do in the next financial quarter. 

Best Free Risk Management Courses Online

What happens if you’re on a tight budget but still want to learn valuable financial skills? Worry not, one of the best primers to risk management is completely free and short in length.

Free 3-Day Risk Management Mini-Course

• Provider: The Institutes
• Time: Three days
• Prerequisites: None
• Cost: Free

This is perfect for someone who knows little to nothing about risk analysis and risk management. In this clear and concise three-day course, participants learn three key lessons:

• Today’s Risk Management Environment
• Organizational Resiliency
• And Emerging Technology and Operational Risk.

You don’t need to have proved yourself in college or other classes to attend. It’s free and open to everyone. Also, practice quizzes and tests accompany assignments. They help you get a feel of how a real-world test of risk management would be. 

These practice quizzes and tests are fantastic for simulating real tests and making sure you have gained the knowledge provided by the instructor and materials.

Applying Chance & Risk to Life & Business

• Provider: Udemy
• Time: 3 hours
• Prerequisites: None
• Cost: Free

This free risk management course introduces complete beginners to the decision making process in risk management. 

Professor Hossein Pishro-Nik shows you not only how to engage in prudent risk management, but how to overall think and react better in certain situations.

A huge aspect of risk management, as you could probably imagine, is the stress and potential anxiety of making a tough call. Hossein Pishro-Nik helps students out with managing the stress of choosing a challenging option. There are 11 sections, each brimming with short, concise videos for optimal and easy learning.

While this is a risk management course, it dips into the deeper real world implications that our decisions have on everything around us.

The Psychology of Risk For Traders

Provider: Udemy

Time: 40 minutes

Prerequisites: None

Cost: Free

This free risk management course goes a step further into the psychological realm. While we all hope that our business decisions and deliberations will end in profit and zero loss, it’s just not realistic. 

This course, taught by Yvan Byeajee, aims to educate students in the various ways that they can better prepare themselves for disfavorable outcomes, but how to develop a more comprehensive and varied way of dealing with risk overall.

This course is perfect for any level of risk management professional.

Best Risk Management Books

As you can imagine, a lot of material regarding finances, including risk management, exists. It’s probably one of your best bets if you want to brush up on risk analysis and more.

‘Fundamentals of Risk Management: Understanding, Evaluating and Implementing Effective Risk Management’ by Paul Hopkin

Author Paul Hopkin provides both rookies and professionals the tools they need to succeed in risk analysis and risk management. No matter what type of business, Hopkin’s definitive text takes you through the unique ways in which to analyze, plan for, and mitigate risk properly. 

Hopkin gives excellent real-world examples of where risk management succeeded and where faulty risk management failed. This special edition is updated, so you can rest assured that you are getting the most pertinent, up-to-date data.

‘Operational Risk Management: Best Practices in the Financial Services Industry’ by Ariane Chapelle

This book centers exclusively on the pitfalls and successes in the financial sector. This timely text shows readers what the most up to date, effective ways of risk analysis make things move in the business world.

The author, Ariane Chapelle, is an accomplished risk manager, and she allows readers to glean valuable knowledge from her wealth of experience. Specifically, she details how things like cyber security, fraud, and information security all link up to risk management.

Risk Management Certifications

Acquiring certifications are fantastic ways to show the world you have got what it takes to succeed. While not diplomas, many hiring managers love to see unique credentials on resumes and in interviews.

Associate in Risk Management (ARM™)

If you have taken the three-day mini-course on risk management, one of the next steps in the risk management process is to get certified. The Associate in Risk Management designation shows others that you have committed yourself to understand financial risk and reward and that you can make prudent and timely decisions. 

In this certificate program, students take core courses like Risk in an Evolving World and Successfully Treating Risk.

After taking core courses, students must undergo ethics training. These ethics classes help flesh out a practical, ethical way of conducting business in the financial sector.

[can we add a few more certs, better to not list just 1 cert…?]

Best Online Risk Management Resources

If you do or don’t decide to take a course or pursue a certification, these various resources from around the Internet are bound to help you understand risk analysis and risk management even more effectively, certificate or not.

IRMI – Risk Management Resources

IRMI is a site dedicated to compiling great risk management resources from all over the internet. They offer everything from their own products to books, PDFs, links, and periodicals by third parties.

They even have a section of their site dedicated entirely to the commentary of experts. Here is where risk management experts give their opinions, musings, tips, and general thoughts on what people need to do to succeed in brand equity and product recall, enterprise risk management, and terrorism risk management and insurance.

This risk management resource should definitely be included in your bookmarks, as it’s an invaluable resource. It has everything.

RMA – The Risk Management Association

If somehow, IRMI doesn’t give you all you need, the other best risk management resource is undoubtedly RMA’s collection of links, documents, and posts.

This site is a great stepping stone towards becoming a risk management professional. RMI offers tools, training, certification tips, books, industry study packs, and financial research.

RMA offers a wide array of workbooks to help you solve risk management problems and come to financial solutions. They have a great forum and other links to risk management webinars, conferences, and casual get-togethers.

The ABA – The American Bar Association

The ABA is unique in that it provides more specific resources for risk management concerning legal matters. While this resource may not apply to everyone, lawyers are heavily involved in the world of risk management, as legality is a massive aspect. 

The ABA offers multiple newsletters, pointers, insurance information, and articles on ethics. If you are either a law professional or interested in the more legal side of risk management, this is the perfect resource to explore and utilize.

Should You Study Risk Management?

Now that you know how to get into the field of risk management, hopefully, the key ideas and takeaways make more sense. 

Contingency plans, mitigating risk, and preparing for the unknown is a lucrative and useful business model found in project management, financial sectors, and nearly every other large and small business. If you are someone who feels they can spot, plan, and analyze risk factors, then learning risk management is an excellent option for your future.

Luckily, there is no shortage of ways to more quickly and efficiently learn the fundamentals of risk management. How to partake in this field is up to you. That in and of itself is a pretty considerable risk. Will you take it?