The best of both worlds-new IRM course

IRM Chief Executive Steve Fowler explained that the IRM started work on its new qualification for risk managers in financial services a couple of years ago but it soon became evident that the turmoil in the financial markets would demand major changes in the approach to risk in that sector. The institute therefore waited for a while, observing and learning the lessons of the crisis, before resuming work on the qualification. “The IRM firmly believes that one of the main factors that will help protect us against further upheaval is a better understanding and application of enterprise risk management at all levels in financial firms, as opposed to an over-reliance on poorly coordinated quantitative risk techniques,” said Mr Fowler. Commercial Risk Europe’s deputy editor Ben Norris spoke to Alex Hindson, the recently appointed Chairman of the IRM, and head of group risk at Amlin, ahead of the institutes Global Risk Management Professional Development Forum next month. He asked him about the new course, the career opportunities for corporate risk managers and other risk professionals and more broadly what the forum holds in store.hideBen Norris (BN): Who is the course aimed at and how can it be used to develop the careers and knowledge of risk professionals? Alex Hindson (AH): That course is not meant to be a purely financial risk management course at all. It is actually about enterprise risk management (ERM) in the financial services industries. On the one hand it is designed to give corporate risk managers, or a professional from some other risk management function, the skills to transfer into financial services giving them the extra knowledge that they need. So we are not offering deep technical knowledge in market or credit risk in the banking sector for example. But given everything that has happened in terms of the financial crisis we are really looking at how you would apply ERM to financial services. And of course the credit crunch has proven that risk managers in financial institutions can think in silos. The experts in credit or market risk or hedging or operational risk do not necessarily join up the dots within an organisation and think of risk in broad terms, as a good corporate risk manager would do. So it is also aimed at expanding the horizons of these groups. BN: So you have focused on specific sectors within the financial services industry. Which are they and why have they been chosen? AH: We are particularly focused on two large sectors—commercial banking and then life and general insurance. We are not trying to cover every element of financial services. We looked to focus on where large numbers of risk professionals were employed and enterprise risk management needs to make inroads. And let’s be clear, this is partly about scale and opportunity for the institute. We aim to continue to cover a broad church, but it is about recognising our ‘marketplace’. If you look at the membership of corporate risk management associations across Europe their numbers are dwarfed by financial services risk professionals. AIRMIC’s membership for example is about 900 strong, but one large bank probably employee that many risk professionals. So you really are looking at a very large population of people who can benefit from this course. BN: As someone who has crossed the divide between the corporate and financial risk management sectors, is the industry booming across the board? Or, as you suggest, are the real opportunities within the financial sector? AH: To be frank, and I have been talking to senior risk professionals in the last couple of weeks, the market for corporate risk managers remains very flat. There are still relatively few senior opportunities. But major banks and insurers like Aviva and the Royal Bank of Scotland have multiple roles that they are trying to fill right now. So the market for risk professionals is pretty bifurcated. One side is flat, maybe in a ‘double dip’, and the other one looks more like the Chinese economy. Also given the regulatory drivers the status of the risk function can be quite different. In financial services the risk function is at the same level as the treasury or finance function, as opposed to the corporate world where the risk function often reports into those functions. So I think from a position of professional opportunity and spreading your wings as a risk professional there is currently more opportunity in some ways in the financial sector. Also if someone has been a head of risk or chief risk officer in a financial services company they are very well positioned to go back into the corporate world at a similar level. Changes to the UK Corporate Governance Code may, in time, apply similar pressures to the corporate sector. BN: And why is the corporate risk sector not flourishing post crisis whilst the financial sector is a hive of activity? AH: Maybe in the corporate sector we are not demonstrating enough value and possibly in hard times we are in danger of looking like a head office overhead. But certainly in insurance at the moment the risk function is a ‘must have’ in terms of meeting the regulatory requirement of Solvency II, within which there is a regulatory requirement to have a risk function. Many insurers previously did not have one—it was a combined function with compliance or audit—so that is what is driving the demand for experienced professionals. BN: With career opportunities high how does remuneration compare across functions and sectors? AH: Well certainly the differential between salaries is growing. I would say on average it is about 30% higher in financial services largely driven by supply and demand around Solvency II. Also the impression I have, confirmed by a recent AMRAE survey, is that there is a pecking order in terms of salary—beginning at the bottom with traditional insurance buyers, then onto broad-based risk managers in corporates with positions of similar seniority in financial services receiving the highest pay. BN: Some people say that risk managers from the two sides of the fence cannot easily cross over and that the skill sets are just too different. This is something that you and the IRM do not agree with? AH: I have moved from the position of corporate risk manager into financial services, and I have seen several people do the same. There is a view that you cannot mix the two—and frankly I think that is rubbish. There is a lot to be learnt from each other and people that go from one side to the other and then back again will add skills and further the development of risk management as a whole. There are disciplines and ways of looking at risk in financial services that the corporate world would benefit from and vice versa. BN: With the Institute’s Global Risk Management Professional Development Forum taking place in Liverpool on March 22-23 what do you expect from the conference? AH: It will be a celebration of where the IRM has come from and where it will go next. Having been founded in 1986 it is our 25th birthday and we will reflect on how much risk management has changed during that period. Beyond that we will look forward in terms of the skills and the knowledge that people need. By holding the event at the BT conference centre in Liverpool we have stepped up a level from our usual university campus surroundings. I think all this is part of the re-branding we did a year ago to sharpen up our image and communicate our focus on our key purpose and key message—which is providing life-long learning in Enterprise Risk Management. For details of the IRM’s Global Risk Management Professional Development Forum please go to http://www.irmforum.org

The best of both worlds-new IRM course

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