An individual responsible for managing an organization's risks and minimizing
the adverse impact of losses on the achievement of the organization's objectives.
(1) Traditionally, risk managers have focused on event risks, but some organizations
have broadened the role to include other types of risk (e.g., operational risks).
The risk manager is charged with identifying risks, evaluating risks, selecting
the best techniques for treating identified risks, implementing the chosen risk
management techniques, and regularly evaluating and monitoring the program.
This person is also involved in the managerial processes of planning, organizing,
leading, and controlling those activities in a business that deals with various
types of risk. (2) Another type of risk manager manages the effects of financial
risks on the organization. This individual is usually a treasury department
employee who must maintain certain critical financial metrics within acceptable
parameters. For example, interest rate risk is a bank's most important financial
risk. Using various hedging tools and techniques such as derivatives, the risk
manager makes sure that the bank's exposure to interest rate volatility is satisfactorily
managed. See also Enterprise risk management;
Interest rate risk;
Risk management process.