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By STEVE YAHN, who has written for and edited national publications for more than 30 years

Risk managers at Fortune 1000 firms don't need a Ph.D. to tell them that their jobs are more important than ever to their enterprises' success. And they don't need a professor to explain how crucial risk training, education and awareness are in today's post-meltdown world. But it helps.

Steve Lindo, executive director of the Northfield, Minn.-based Professional Risk Managers' International Association (PRMIA), observed that all three main aspects of his organization--certification, training and education--are booming. Two years ago, PRMIA passed its 50,000 membership milestone. Today, the organization has 69,484 members in 198 countries.

"From a recruitment perspective, we've seen a migration from having a risk certification being a nice thing to have on the resumes of candidates for risk jobs to a must-have," said Lindo. "That's taken place in the last 12 months. The candidate without the certification is at a disadvantage."

Echoed the risk manager at one of the largest media companies in the world: "The thing that strikes me is the scope and extent of the major risk management certifications. Specifically, the exams appear to focus on the actuarial and financial modeling aspect of risk management, which will be critical in developing our discipline beyond conventional insurance buying in order to account for litigation risk.

"Thus, if these certifications will help develop financial risk management skills that can augment other skills such as developing budgets and forecasting, these type of designations can then become an employment credential in and of themselves. In other words, such designations may be a factor in helping you get a job in the near future and, ultimately, may be a prerequisite to getting a job. I believe all of that is key in helping to advance the risk management's profile in the working community."

In another intriguing indicator of growth, two years ago PRMIA launched its Associate Professional Risk Management certification, more than anything as an intermediate exam for future professional risk managers.

Added Lindo: "But it has turned into somewhat of an engine for people in other professional areas, such as auditing, technology, legal, operations, accounting and so on for whom they already have adopted a career, but they realize they have an incomplete knowledge of risk management.

CERTIFICATION JUST FIRST STEP?

H. Felix Kloman, who had a distinguished career in risk management for Towers Perrin, cautioned against employers placing undo emphasis on certifications.

"My idea is the certification is an initial step in beginning to understand what risk management is all about," said Kloman.

"It doesn't guaranty you will a good risk manager, but is at least a good starting point to understanding the nature of the discipline," added Kloman. "Certification is a form of continuing education."

Kloman, Lindo and others underscored that, while technical expertise is of course fundamental to risk certification and good risk management practice, the ability to be a good communicator is just as important.

"The difficulty of getting senior managers in an organization to follow the advice of risk managers is crucial," observed Kloman, whose work can be found at seawrackpress.com.

Added Kloman: "One of my critiques is that a risk manager thinks he knows everything after taking a certification course. There's a lot more to the behavioral side of the risk management process than there is in just following the numbers."

JOBS, JOBS EVERYWHERE

Whatever the crucial traits of a solid risk manager are, job applicants better get their act together now. As you might expect during a "crucial moment in risk management," there is a surplus of job openings in the field.

"Risk management jobs are much more in the public eye," said Barbara Hewitt, senior associate director in the career services office at the University of Pennsylvania. "I definitely have seen more postings than I have seen in the past."

For instance, Hewitt has posted a notice for a risk management associate at a large bank; a technical/credit risk associate at a ratings agency; a consultant at a consulting firm (the company has expertise in a variety of areas, including risk management); and a junior credit risk controller at a large bank.

The term "risk management" has received significantly higher credibility over the past six or years, especially in the financial field where they have developed very sophisticated models that presumably are able to tell corporate investors and traders what the potential downside risk is as compared with the potential upside, said Kloman.

"The banking institutions around the country are going to want to have one or two risk managers looking at operational risk and market risk as they move money around," added Kloman. "So there's the potential for employment within the financial world, and this will make certification all the more important."

PRMIA's Steve Lindo noted that the capabilities of companies to understand their risks have been underinvested in the last five to seven years.

"So until that catch-up occurs, there's going to be a shortage of risk managers, especially ones with practical experience," Lindo said. "Demand for risk managers will certainly remain strong for awhile because in our assessment there's a major backlog amongst companies that are taking complex risks that aren't spending enough time analyzing and assessing their activities to determine what might be the extent of their negative risk situation."

But even if a catch-up does occur in developed countries, according to Lindo, there are many places in the world where growth for his organization is strong, like China, India and Eastern Europe.

"The market in these places is simple today, and the risk requirements are somewhat modest," he said. "But the implication is that as those markets evolve and become more complex they're going to need to have a corresponding increase in risk management capability at the institutions that operate within them."

July 1, 2010

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