As institutions face budget pressures, regulatory shifts, and operational complexity, risk leaders are being called upon to inform strategy, quantify uncertainty, and help drive financial decisions. In this article, I offer a perspective on the skills required to lead the next generation of risk managers. These insights are shaped by my journey, which began in finance and shifted to risk management.
Risk Management’s Expanding Role in Strategy
As higher education institutions have strengthened their strategic visions over the last decade, risk professionals are being called into earlier stages of financial decision-making. One tool that gives risk managers this entryway is understanding the risk appetite statement (RAS).
The RAS articulates the level of risk an institution is willing to take to achieve its objectives. A well-structured RAS can serve as a decision-making tool for funding strategic projects by ensuring alignment with institutional mission and goals. A major component of the RAS is using financial quantification to establish Key Risk Indicators (KRIs) and educate the community on which risks to take by estimating their impact. This is where financial skills come into play.
Understanding finance terminology and its application provides a solid foundation in risk quantification. During my earlier years as a treasury professional, I prepared a dashboard of the institution’s cash forecast. Being able to quantify the cash position in a way that made sense to senior leadership helped me to not only understand their perspective but also guide recommendations. Quantification, visualization, making trade-offs, and defending one’s decisions are skills that can help risk managers get a seat at the leadership table.
Fast-forward to today, and it is essential for risk professionals to partner with treasury, budget, and finance to gain support and funding for risk initiatives. From navigating debt covenants that mandate insura