Risk Management Jobs Key Terms

Pay attention to key terms to decrease your risk

By Meredith Fagioli

Risk management jobs center around the identification of risks. After identifying them, the risks are put into an order of importance. Risk management teams gather and try to come up with game plans to minimize, monitor, or, at times, control the probability that the risky scenarios will occur. Many risk management jobs are located in the financial area, dealing with credit and lending.

If you are interested in changing careers to a position in the risk management field, or want to learn more about risk management jobs, here are a few key terms to help you get started on your journey of risk management knowledge.

Fraud

Fraud is the act of intentionally falsifying information in order to deceive another party. Fraud can happen when people are filling out credit applications or applying for a bank loan.
Try: Visit the International Risk Management Institute for more information on fraud and other risk management key terms.

Risk assessment policy

A risk assessment policy is the overall guideline used to determine the level of risk in certain scenarios. An example of when a risk assessment policy would come into action would be when considering the loan application of a person with a low credit score.
Try: At the Food and Agriculture Organization of the United Nations, you can find a more technical definition of a risk assessment policy.

Credit scoring

When a financial institution performs credit scoring, the risk management department uses a standard formula to determine a credit score that will show a person's or business's credit worthiness. For example, a low score might mean they are less inclined to pay their bills on time and therefore, would carry a higher risk.
Try: At MSN, you can read about credit scoring.

Risk capital

Risk capital is money that is invested in small or start-up companies in return for equity in that company. Typically, these companies cannot get funding from any other sources because they carry a high risk factor.
Try: If you head over to InvestorWords.com, you can find a definition for risk capital.

Risk sharing

When a company performs risk sharing, they spread the risk across a few companies. This may mean they outsource some work to another company or they purchase extra insurance to protect against a negative outcome.
Try: There is a definition of risk sharing at Businessdictionary.com.

Default probability

A recipient of a loan or other financial support gets a default probability score by a risk management department. That score signifies the probability that the loan will go into default.
Try: At Risk Limited Corporation, you can find more information on default probability.