By STEVE YAHN, who has written for and edited national publications for more than 30 years
NEW YORK---When it comes to getting ahead in the world of risk management, communications skills trump technical and quantitative expertise.
That was the conclusion of a panel of experts who spoke to a crowd of more than 500 people at a New York chapter meeting of the Global Association of Risk Professionals (GARP) held on June 17 at 7 World Trade Center.
"Our clients want to be told about risk management," said Stephen Slade, managing director, risk management, at the Commonfund, which manages $26 billion in assets. "You not only have to be right, you have to convince people to make the right decision."
Slade, who directs a four-person risk management group, added, "There should be a culture of risk. Our clients want to be told about risk management."
Richard C. Cahill, vice president and deputy head of the credit risk department, bank supervision group, at the Federal Reserve Bank of New York, conceded that, while quantitative skills are vital, employees with M.B.A.s and Ph.D.s need to be able to communicate.
"We don't need another quant," said Ken Abbott, managing director and chief operating officer, market risk department, at Morgan Stanley. "We need people who can see the numbers correctly. We need people who can do interpretations of data and come up with a simple explanation. We need them to compile a risk coloring book for management."
Abbott said that, because he spends half of his day dealing with regulations, he therefore has a need for staff to communicate with regulators. His group has tripled in recent years, Abbott added.
Abbott and others on the panel stressed that companies need risk managers who can dig deep into data and come to the right conclusions.
Jon Shaw, director, market risk controls and enterprise risk reporting, at energy company Hess Corp., underscored that there is a trend for risk managers to reach out beyond traditional boundaries of markets and trading.
HIT THE GROUND RUNNING
The best way to have a successful long-term career in risk management is to come into an organization at ground level, seemed to be the consensus of all of the panel members.
Michael Sheptin, principal, financial services at Ernst & Young LLP, said that the most common entry-level position at his firm was to come in as a member of its reporting team. The next step would be to move onto a desk in which numbers were verified. Next would be analyst and associate positions. The step after that? A vice president position.
"Somebody I can give a project to," he said.
Paul Gibson, principal, global financial services, at the executive search firm Heidrick
& Struggles, said that in commercial banking the starting position is usually in one of the sectors covered by the bank.
"For the insurance sector, the bank is often looking for a trained actuary," he noted. Beyond that, employees with initiative typically move from the loan desk to other positions within the bank.
ERM AND PREVENTION
Not surprisingly, a facility for and a familiarity with enterprise risk management (ERM) was emphasized by the panelists, but again, with a strong communications component.
"ERM is more qualitative work than quantitative," said Sheptin. "You really have to be a translator."
Database skills are still instrumental to a top-flight risk management operation, the panelists also said. Sheptin several times noted the importance of risk managers knowing the products and operations they're involved with.
"What happens to the importance of risk management if the economy enters a recovery period?" asked a member in the audience.
"One view of risk management is that it's fighting fires," said Rich Apostolik, president and CEO of GARP. "But another role is that it's helping build better building codes, processes and procedures down the road. In that capacity, the role of risk management is prevention."
June 18, 2010
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