Roles and Responsibilities of a Business Manager and a Risk Manager

A comparison between the conventional business manager and the risk manager indicate that it is the task of senior managers to lead the organization, and the task of the risk manager is to protect the organization against unwanted risks. Traditionally the senior manager will lead the organisation by giving direction to the workforce regarding the strategic and operational activities necessary to achieve the goals and objectives. The role of the risk manager on the other hand is to identify the risks associated with the activities to ensure the continued existence of the organisation. These risks include strategic risk, market risk, financial risk as well as operational risk. The primary aim of the this manager would be to design and put controls in place that will minimise the impact and consequences of these risks without affecting the direction of the business.

One of the main goals of a senior manager is to look forward into the future to identify opportunities for growth and the task of the risk manager is to look forward for danger and to move cautiously to reduce risks. It is a defined role of senior managers to look for future growth opportunities for the business. The task of the risk manager is to assist the senior manager to evaluate the risks associated with the opportunities and guide the decisions to minimise the potential negative consequences of the opportunities taken.

It is the task of senior managers to develop plans for the direction of the organization and it is the task of the risk manager is to execute these plans. The tasks of both managers includes planning and execution activities. It is not this that sets the roles of these persons apart, it is the detail and focus of the activities that differs and should be so designed to ensure maximum synergy of roles.

Much of the practical world of decision-making is dominated by the short-term interests of the organization, whereas risk managers are dominated by the long-term. The operational decision making is normally driven by the short term interests of the organisation. This could typically include decisions about cash flow and production schedules. The risk manager should focus on the long term survival of the organization. This does not mean that this manager only takes longer term decisions but implies that the majority of the decisions are focussed on a longer time horizon.

The job of the risk manager is to be the bearer of bad news about the future, while no one really wants to hear that in the confident, up-beat world of management. He should be the voice of reason in cases where the rest of the management team only focuses on the positive outcomes. Very often managers tend to ignore the potential negative consequences of risks that are inevitable. This results in insufficient control measures being implemented to prevent crippling losses. It is the role of the risk manager to be that voice of reason to ensure that objectively assessed risks are ameliorated to a tolerable level without negating the business opportunities and associated profits completely.

One of the keys of success in building a successful management team is that the team is capable of exploiting the business opportunities in a manner that is sustainable. The roles of different types of managers are essentially the same, with some having a different focus than others potentially resulting in different goals. This is the challenges that managers face on a daily basis. The often conflicting goals can be overcome if there is a clear understanding of the individual roles of different managers.

© Carl Marx