 |
||||||
| Tuesday, February 9, 2010 |
Contact Us
|
 RSS
|
|||||
|
|
| |
|||
|
||||||
|
||||||
|
|
ANALYSIS
March 2, 2009
Sagging Index no longer reflects what’s going on in the market, some say, Replacements? Google it, to start.
March 2, 2009
Downward price spiral will actually boost the cost of capital for most companies. CFOS, take note.
March 2, 2009
The latest bailout at AIG could be a preview of how the president will deal with Wall Street.
March 2, 2009
No corporate defaults. Big debt offerings. Percolating CP issuance. Things may be looking up in the capital markets.
|
|
|
|
September 3, 2007 12:01 AM ET
Doug Plummer
WHAT'S IN AN ACRONYM? Plenty, says Costco insurance manager Zois Johnston, now working on his fifth professional credit.
Today, Mr. Johnston’s business card is a veritable alphabet soup. Now an insurance manager for Costco, operator of an international chain of membership warehouses, he is an Associate in Risk Management (ARM), a Certified Risk Manager (CRM), an Associate in Insurance Services (AIS) and a Chartered Property Casualty Underwriter (CPCU). Studying for all those credentials gave him a “good background” on risk management and the insurance industry, Mr. Johnston said. The CPCU, for example, provides “a solid understanding of insurance in general,” he explained. “You dissect and really understand the language in a policy.” And Mr. Johnston is still learning. He’s currently working on his fifth designation—an Associate in Claims (AIC)—and says he likely will pursue a Certificate in Enterprise Risk Management (CERM) in the next few years through a master’s level program at Georgia State University. Financial advisers and insurance agents have long had an array of professional credentials to choose from, but risk managers have been catching up: In just the last five years, half a dozen groups have rolled out new designations related to risk management. “They’re popping up like daisies,” said Lance Ewing, vice president of risk management at Harrah’s Entertainment and a past president of the Risk and Insurance Management Society. Mr. Ewing should know: He’s an ARM and a CRM, recently added an Enterprise Risk Management Professional (ERMP) designation from the Insurance Educational Association, and is working on both a CPCU and a Certified Insurance Counselor (CIC) credential. While Mr. Ewing also has two master’s degrees, one in law and justice and the other in occupational health and safety engineering, he said that in contrast to academic degrees, professional credentials “allow you to be more current.” The proliferation of credentials reflects an increasing demand for risk management expertise as companies cope with financial shocks ranging from the accounting scandals at Enron and WorldCom to 9/11 and Hurricane Katrina. Indeed, the rise of various acronyms can serve as a kind of evolutionary chart of risk management. Risk management grew out of insurance, and the granddaddy of risk management designations is the ARM, which two insurance groups, the American Institute for CPCU and the Insurance Institute of America, have been offering since the 1960s. After the finance industry developed sophisticated methods for measuring and managing financial risks in the 1990s, professional organizations followed with financial risk designations, like the Global Association of Risk Professionals’ Financial Risk Manager (FRM) credential and the Professional Risk Manager (PRM) designation from the Professional Risk Managers’ International Association (PRMIA). Nowadays, the buzzword is enterprise risk management (ERM), an approach that emphasizes a comprehensive view of an organization’s risks and employs that information to plot corporate strategy. The two newest risk credentials, rolled out just this year, both reference that concept: the Society of Actuaries’ Chartered Enterprise Risk Analyst (CERA) and the Insurance Educational Institute’s Enterprise Risk Management Professional (ERMP). Some credentials are highly specific, like the Certified Safety Professional (CSP) and the Associate in Captive Insurance (ACI). It’s even possible to concentrate just on credit risk, certainly a timely topic, with the Risk Management Association’s Credit Risk Certified (CRC). David Koenig, president of PRMIA, said that it’s not surprising that risk management credentials are a growth industry. “Risk management as a profession has changed dramatically,” he explained. “The ability to do more complex analysis—the systems abilities, the governance structures, the derivative instruments that are available—all of this has made risk management, and financial risk management in particular, tremendously advanced from what it was 10 years ago.” James Lam, president of an eponymous risk advisory firm, said the demand for training in the field ranges from junior and mid-level positions all the way up to the executive and board level. “That’s a key driver in the proliferation of these certifications,” he noted. “And because risk management is not as well defined as accountancy or even investment theory, you don’t have just one certification, like a CPA or a CFA. There seems to be more variety of different certifications that focus on different aspects of risk management.” The proliferation of these certifications may not be all it’s cracked up to be, however. Parveen Gupta, chairman of Lehigh University’s accounting department, argued that many of the certifications take too narrow a view of risk management and fail to prepare risk managers to make the broad-based assessment of an organization’s risks that ERM requires. “There’s a whole litany of risks that a company should be looking into and managing proactively if it wants to honestly and forthrightly say it has an ERM program,” Mr. Gupta said. “And I don’t think any of these certifications are comprehensive enough.” Among the biggest gaps he sees these days: reputation risk and HR risk. “Reputational risk has become very critical,” Mr. Gupta said. “Many times there is a crisis, and companies tend to mishandle crises.” And he argued for a focus on HR risk, given the complicated laws related to employment and the fact that employees are suing employers at a higher rate. There’s no end in sight to the parade of credentials. Jeff Thomson, vice president of research for the Institute of Management Accountants, said his organization plans to launch a new designation next year that’s focused on assessing corporate risk. “We’re putting forward this certificate program that will enable public companies of all sizes to assess the effectiveness of their internal controls on financial reporting” in line with the Securities and Exchange Commission’s regulations on Sarbanes-Oxley, Mr. Thomson said. “But we would argue that it can be used to assess other types of risk, not just Sarbanes-Oxley compliance.” From Mr. Thomson’s perspective, many credentials focus too much on financial risk. “We believe that in the whole area of risk certifications,” he said, “we need to broaden the scope considerably if we’re going to affect business performance.” While thousands of risk managers are acquiring designations, it’s not clear that employers pay much attention. Michael Magsig, a global sector leader at executive search firm Korn/Ferry International, said that when he works with companies on filling risk management positions, the key is what candidates have accomplished in previous jobs, not what credentials they have earned. “Employers first look at experience,” Mr. Lam agreed. “They also look at academic background. After that, they look at certifications.” FW
|
|
|
|
Latest News
• Reversal? Stanford advisers sue the SEC
March 5, 10:52 AM EST
• Third of companies not complying with new tax reporting rule
March 4, 4:25 PM EST
• Regulators aware of problems at First National for six years: audit
March 4, 3:31 PM EST
• Influential advisory group to look at fair-value, off-balance sheet accounting
March 4, 4:16 PM EST
• In a first, NY State hopes to sell bankrupt insurer
March 4, 3:59 PM EST
CRAIN'S BENEFITS OUTLOOK 2009
SPECIAL REPORT
MOST POPULAR
|
MORE ANALYSIS
Enlarge
Crain Financial Group:
InvestmentNews |
Pensions & Investments |
Workforce Management
Copyright ©2010 Crain Communications Inc
All rights reserved.
Privacy Policy |
Terms & Conditions