1. news analysis
risk management
StrategicRisk [ January 2015 ] www.strategic-risk-global.com
The future of risk
T
he interconnected and inter-
dependent nature of modern society
has arguably elevated the status of risk
management to a more central and a
generally more respected role within
the corporate arena.
The responsibilities of a risk man-
ager, however, are not universally
defined and often vary from one busi-
ness to another. These variations and
different perspectives regarding the role of a risk manager have
created confusion among business leaders and is perhaps inhib-
iting the professional recognition of risk management.
With risks becoming ever more connected and their conse-
quences potentially more widespread, raising the standards of risk
managementeducationandpracticesissomethingfirmsmayfind
to be a worthy investment. Establishing standards of education
and practice would arguably help risk managers achieve profes-
sional recognition from within the corporate environment and
bring greater value to their respective organisations.
The current lack of a universally agreed definition of risk
management is inhibiting the effectiveness of the function
within businesses, according to ArcelorMittal Luxembourg gen-
eral manager, asset risk management, Adrian Clements.
“Because there are several opinions as to what risk manage-
ment is, chief finance officers, chief executives and chief operat-
ing officers become confused when they speak to risk managers.
As a result, risk managers are not taken seriously,” he says.
The issue has been acknowledged by the wider risk manage-
ment community and 2015 is set to be a milestone year for the
professional development of risk management.
The Federation of European Risk Management Associations
(FERMA) has created a certification programme that establishes
pan-European standards for training and practice. The certificate,
European Certified Risk Manager, will be open to applications
from individual risk managers and organisations with risk
Professional recognition for risk managers could
bring greater value for businesses and wider society
management training programmes in spring/summer 2015, and
will act as a benchmark against which risk management compe-
tence, gained through education and experience, will be measured
and awarded.
Applicants will have their competence in risk management
measured in terms of knowledge, experience, ethics and contin-
uing professional development. Risk managers can apply for
two separate certificates: ‘FERMA certification passport’,
awarded to risk managers with a foundation in risk and insur-
ance; and ‘FERMA advanced’ for more experienced profession-
als. The former will recognise qualifications such as diplomas
and degrees in certain fields of risk management and the latter
will recognise professional experience.
FERMA president and law firm DLA Piper director of risk
management and insurance Julia Graham says the certificate does
not intend to define risk or risk management, but rather to find a
common ground to develop training programmes. She says: “We
use different language all over the world. ‘Cocoa’ is the term used
in the US, but elsewhere people might say ‘chocolate’. Likewise,
‘risk’ has many definitions and these differ from country to
country. Our aim is to harmonise these different definitions.”
FERMA’s certification programme has received positive sen-
timent from the wider risk community and its objectives have
been endorsed by risk management leaders around the world.
“Risk managers face a widening spectrum of challenges and
the trend is not expected to lower in the near future,” says Lau-
rent Nihoul, board member of Luxembourg Association for Risk
Management (ALRiM). “ALRiM welcomes and fully supports
FERMA’s certification project, which should enhance the neces-
sary cross-disciplinary understanding and practical knowledge
that risk managers need to tackle their organisation’s current
and upcoming risk management challenges,” Nihoul adds.
Global issue
Singapore based head of enterprise risk management and inter-
nal audit at aviation firm Tigerair, Gordon Song also recognises
the same issues in Asia and says professional development is
essential to retain the best talent.
“There is not enough proper training for risk managers, which
is a major reason why risk managers leave the profession,” says
Song. “Risk management is a profession, which must be recog-
nised.Althoughsomebusinesspeoplecomeintoriskmanagement
later in their careers and also bring value, there must be recogni-
tion for risk managers who choose risk management as a career.”
Events of the past five years, such as the disappearance of
Malaysia Airlines Flight MH370; the 2011 ash cloud that envel-
oped Europe and the Tohoku earthquake in Japan and multiple
social uprisings have arguably highlighted the significance of risk
management for businesses. Yet, the future of risk management
could extend beyond corporate interests, says Clements.
“In 10 years, risk managers at corporates will be asked to help
advise local villages, townships and even cities on how to manage
their infrastructure and properties better because governments
will not be able to afford it,” he says.
“Risk management will have a major role to play socially and
so it will be important that risk managers have the right key-
stone education to help the people make robust decisions.”
If Clements’ prediction is correct, risk managers will have even
greater responsibility within society. In the meantime, FERMA’s
certification programme may be evidence of the function’s grow-
ing status and influence within the corporate environment. SR
‘“Risk” has many
definitions and
these differ from
country to country.
Our aim is to
harmonise these
different
definitions’
Julia Graham, FERMA
and DLA Piper
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