Headstart International offers FRM training and FRM certification course for those individuals who are interested in earning the prestigious Financial Risk Manager (FRM®) designation.
Financial risk management is a process that entails companies setting up guidelines to define their policy on accepting financial risk. Individuals who work in financial risk management do not make investment decisions for a company. Instead, those individuals create the guidelines that the risk-takers must follow when analyzing investments they are considering for the company.
Financial risk management is defined as the practices and procedures that a company uses to optimize the amount of risk it handles with its financial interests. Senior leaders of a company that practices financial risk management should produce a written policy on financial risks they are willing to accept and follow that policy. They should also monitor the risks taken, and release reports on the results of these risks to help with analyzing them.
Financial risk management does not define the types of risks that a company should take, or involve analysis of those risks. Instead, it provides guidelines that those who make financial decisions for the company must follow. The board of directors and senior managers within a company follow the policy designed by the financial risk management department when making investment decisions.
Jobs in Financial Risk Management
The head of a risk management department within a company is known as the chief risk officer. Depending on the size of the company, the number of employees in a risk management department can vary. Some of the positions within the department include the head of market risk management, the head of credit risk management and the head of operational risk management. These individuals supervise teams that create the company's risk management policies and procedures for their individual type of risk management.
Independence and Conflict of Interest
In financial risk management, it is important that the financial risk management department and the employees who work within it are not supervised by those responsible for making the decisions for the company involving financial risk. This avoids risks of conflicts of interest between the financial risk management department and members of the board of directors or senior management who might try to influence policy with threatened or implied job actions if members of the department do not do what they are asked to do. Employees in the financial risk management department should not transfer to a department that makes the financial investment decisions for the company. This is another policy to avoid conflicts of interest.
Employees involved in the financial risk management field can become part of a international association to network with others and receive additional education. This association is known as the Global Association of Risk Professionals. A financial risk management professional can become take an exam offered by GARP to become a Certified Financial Risk Management Professional.