Making of a good risk manager

I became a credit signatory at ANZ Grindlays Bank in 1992. At Standard Chartered Bank, I had to clear all fourteen modules of the Credit Skills Assessment (CSA) by OMEGA London to qualify as a proper risk manager. At Citibank N.A., apart from my long experience in corporate banking and loan restructuring, I also needed cross-border audit exposure to even be considered for the Senior Credit Officer (SCO) designation.

In today's banking world, the role of a risk manager has evolved from that of a back-office compliance monitor to a front-line strategic partner. The best bankers today not only understand balance sheets but also have insights into behavioural economics, geopolitics, and ethics. A true all-round risk manager does not just minimise risk; they anticipate it, read its signals, and turn it into an opportunity.

At its core, banking is about managing risk. Credit risk remains central to commercial banking. It is the art of lending wisely, balancing growth with prudence. A seasoned credit officer looks beyond a borrower's financial statements to assess character, industry conditions, and cash flow management. Experienced bankers know that behind every non-performing loan lies not only a flawed business decision but often a failure to understand people, purpose, or process. Credit appraisal must go beyond number-crunching to grasp how a business can sustain itself.

A capable risk manager must understand operational risk alongside credit risk. Operational risk arises when things go wrong within an organisation, whether due to weak processes, insufficient controls, or human error. As the world becomes more digital, operational risk is increasingly linked to cyber resilience and data integrity. A single failure in system control can erode years of trust and reputation. Today's banker must therefore think like a technologist, recognising that internal controls are not bureaucratic burdens but safeguards for credibility and public trust.

Market risk, originating from fluctuations in interest rates, exchange rates, or equity prices, is equally significant. Global shocks or policy shifts can heighten volatility for banks operating in emerging economies such as Bangladesh. A sound risk manager must blend prudent treasury management with economic foresight. The hallmark of a good banker lies in their ability to maintain liquidity buffers, align asset-liability positions, and interpret macroeconomic trends.

In a globalised financial system, country or cross-border risk has become crucial. When a bank finances international trade or takes offshore exposure, it indirectly inherits the political and economic stability of the partner country. A prudent risk manager knows that domestic balance sheets can be affected by sudden regulatory changes or a sovereign default elsewhere. Careful diversification, constant monitoring, and awareness of global risk indicators are therefore essential.

Perhaps the most subtle yet far-reaching of all is reputational risk, especially for global banks. A single lapse in communication, ethics, or lending practice can cause damage that extends beyond financial loss. Reputation today is shaped daily through an organisation's interactions with clients, regulators, and communities, and it is not the responsibility of public relations alone. A risk manager must act as the institution's moral compass, ensuring that every business decision aligns with accountability, fairness, and transparency.

A good risk manager is part guardian, part strategist, and part analyst. Their strength lies not in saying "no" but in understanding and managing risk effectively. As Bangladesh's banking sector continues to grow and integrate with global markets, the demand for such comprehensive risk leaders will only increase. Banks that invest in developing professionals who balance caution with profitability will not only withstand the pressures of global finance but also thrive.

The writer is a banker and economic analyst