- Julian Talbot
How to make money from risk management?
I don't often get asked how to make money from risk management, even though I've been making a good living from it for over 30 years.
You might at least think that I'd get asked for some suggestions. But no. Of the many questions I am regularly asked about risk, how to make money from it is surprisingly rare.
There are several ways in which individuals and organizations can make money from risk management. Some approaches that I have used or am currently using include:
Providing risk management consulting services: Many organizations need help identifying, analyzing, and addressing potential risks. Individuals with expertise in risk management can offer consulting services to help organizations develop and implement effective risk management strategies. That would be me. And here is a short video with everything you need to know to be a successful risk management consultant (versus the other kind - an unsuccessful one).
Developing and selling risk management software: There is a growing demand for software and tools to help organizations manage their risks. Individuals and companies with risk management and software development expertise can create and sell risk management software to help organizations automate and streamline their risk management processes. You can follow this link to get a free trial of our latest offering at SECTARA.
Investing in or starting risk management companies: Risk management is an important and growing industry, and many companies offer products and services related to risk management. Individuals and organizations can invest in these companies and profit from their growth and success. Here are examples of a risk company and a cybersecurity company I'm currently investing in.
Writing books about risk management. This is more fun than profit, but it's a great way to build credibility and, at the same time, learn more about risk management. Delivering training forces you to know your stuff, but there is nothing like writing a book to dive deeply into a topic. You can find my process at the bottom of this article if you'd like to know my tips for writing books.
Delivering risk management training. Yes, I do that also, and it can be great fun. It is sometimes profitable but not hugely so. It is, however, a great way to do some good, meet great people, and be paid to travel.
Trading and investing in derivatives: Options are my preferred medium. They are financial contracts that give the holder the right, but not the obligation, to buy or sell an underlying asset at a specific price on or before a certain date. Options can be used to hedge against risks or speculate on an underlying asset's price movements. Trading options isn't for everyone. It can involve significant risks. Options are complex financial instruments, and traders need to thoroughly understand how they work to make informed decisions and manage their risks effectively. Trading options can be profitable, but it also carries the potential for significant losses. I've managed to achieve both.
Overall, there are many opportunities to make money from risk management. The above are just a few potential approaches that I have used. How you choose to make a living, or a small fortune perhaps, from risk management will depend on your skills, expertise, and interests.