Risk managers are not responsible for making decisions on whether an investment scheme is worthwhile for their companies. They provide the Board of Directors with in-depth insights into its pros and cons. Risk managers even offer suggestions on how the company can minimize the potential risks of the investment. This enables the directors to correct decisions on enhancing the overall value of their companies. However, to get their message across to the directors, risk managers must have good communication skills. Otherwise, they will not be able to perform their duties diligently, and the business might suffer from potential risks.
Michael Saltzstein – Why is risk management important for companies of all sizes?
Michael Saltzstein is a financial expert from California who specializes in risk management and company insurance. He has a wealth of experience in the field and helps small, and large companies devise suitable risk management strategies for their businesses. Many of them are doing well in the market today due to his foresight and guidance. When corporate clients meet him for the first time, he assesses various aspects of their businesses. This enables him to understand the potential risks that business owners face when conducting their commercial activities. Then he suggests the measures they need to take to minimize these threats and maximize their profits.
He says risk managers perform an important task for the companies they work for. They identify, evaluate, and manage the potential risks of all the investment schemes their companies pursue. They then present their findings to the senior executives and Board of Directors. The directors and senior executives then decide whether or not they can incur these investment risks. Then they work with the risk managers to devise a strategy to minimize these potential investment risks. In doing so, they keep in mind the overall business objectives of their companies. Only then can they enhance and maximize their companies’ value in the market.
Why do risk managers need good communication skills?
Risk managers need to have good communication skills for the following reasons:
- To explain to the directors the risks they face when undertaking a particular investment,
- To educate the directors on the impact, these risks can have on their business operations,
- Deal with the long and short-term uncertainties the directors have regarding the investment risks,
- Resolve conflicting interests among directors regarding various investment risks,
- Devise a suitable plan acceptable to the directors on how to minimize the impact of investment risks,
- Generate awareness among the directors on the importance of risk management for the companies, and
- Create an atmosphere of transparency within the company where questions regarding risk management can be addressed.
As per Michael Saltzstein risk managers have to properly communicate potential risks of various investment schemes to directors and senior executives. They need to clearly understand the pitfalls of implementing these investment schemes. Only then can they make an informed decision on whether it is worthwhile pursuing the schemes. If the investment risks are too high, they can look at other ways to boost their companies’ value. In the process, the directors will be able to gain their stakeholders’ loyalty, and the business does not fall prey to any risks that can be detrimental to its progress.