4 Ways how FRMs can shoot Gray Swans

4 Ways how FRMs can shoot Gray Swans

The value of a FRM professional is seen in the ability to protect a company from financial and reputational risk and measure organizational success. It is normal that organizations face unforeseen risks and challenges in the journey, but they hire capable and expert FRM professionals to prevent allocating resources to save both company and stakeholder’s reputation. Unforeseen risks have made a major impact due to poor business practices as it has led to a 50% decline of shareholder value in companies across the world. On the contrary only 10% risk has been analyzed which has naturally placed a high demand on companies to hunt for reputed FRM professionals capable of building a firewall against unforeseen risk. To achieve this goal, we focus on 4 key strategic areas.

Frm, frm course, frm exam, garp frm, cfa frm, frm certificate, frm part 1, frm part 2, kaplan frm, schweser frm

Building Resilience

Risk professionals whatsoever the case cannot ignore gray swan events as it can threaten and damage the reputation and financial health of a company. Risk managers need to build a resilience culture in companies that derails any unforeseen risks and shocks. Building resilience culture should be taken on a continuous basis instead of a hit-and-run exercise. One of the bottom line reasons why risk resilience has become the spiraling need of financial companies across the world is the globalization trend that is making business more complex and interconnected.

Imagining Risk Landscape

Financial Risk managers need to have a prepared mindset instead of treating risks casually. Strategic investment should be made the top priority by FRMs rather than procrastinating by regarding the crisis or risk as insignificant and would not affect. A proactive team of risk managers can best handle gray swans if they are able to dedicate time, strategy and resources to comprehend and measure the severity of the predicted risk. One of the drawbacks of where risk managers fail to shoot gray swans are where there is no constant reviewing of the risk registry, but when done can give risk professionals an expanse of understanding new risk factors and keep their finger on the pulse.

Peer Support on Risk Aversion

As a risk analyst, you may be proactive in foreseeing the risk but what if your manager does not share the same vision in anticipating risk. The commitment and support gap might lead your vision into a disaster. This can also override the seriousness about the anticipated business risk and bring serious damage to the reputation and growth of the organization. One of the ways FRM managers can use is presenting qualitative and accurate risk data to help their business leaders understand and win their confidence to build a sound risk resilience framework against unprecedented risks.

Frm, frm course, frm exam, garp frm, cfa frm, frm certificate, frm part 1, frm part 2, kaplan frm, schweser frm

Plan to Action

Agile financial risk management is successful when the resources are prudently allocated much before disaster strikes. To establish this, FRM managers need to place three key factors as a priority. FRM leadership is one of the vital keys that saves both the organizational reputation or avert business risks in a period of emergency or crisis.  Secondly if the FRM leaders or analysts are able to deliver timely and strategic communication within the team and leaders, the chance of risk overtaking the company may be arrested well in advance. Thirdly, risk professionals need to ask basic questions: How do I manage risk? What are the preventive measures to avoid risk? And what sort of commitment would result in successfully containing the risk arising in the future.  

#FRM #frmexam #frmcourse

Leave a Comment

Your email address will not be published.

Global Kaplan Schweser CFA with Miles Education