I’d like to learn more about Enterprise Risk Management and potentially get into the field. I would appreciate suggestions of those who are in the field.
Can you be more specific? Suggestions on what?
I don’t have any experience, I’d like to learn about ERM and potentially get a job. My questions are: 1) how can I learn? 2) how can I get a job? is there a certification that might help me?
maratikus, others may know much more about this than I do, but here’s my $0.02: I’ve worked for a few years in one kind of risk management, i.e. regulatory risk. I deal regularly with others who work at my firm, who manage other kinds of risk, e.g. market risk, credit risk, etc. Recently (at least in my experience) ERM has surfaced and gotten more and more attention. I’m still trying to figure out what it means. My cynical view is that it’s the very obvious principle that an enterprise should take a big picture view of all the risks it manages. How you put that into practice would vary a fair bit from one firm to another. There are consultants around who want to sell their services teaching firms how to do ERM, but I’m not convinced there’s anything of substance there. So… if I’m right, I’m not sure how you go about getting a job that is literally in that field, because I don’t know if it’s a field. A financial firm of any appreciable size will have different people managing risk, each of whom has his/her own specialty. Senior management of the firm are the ones who would take an ERM view. Maybe I’m way off, there’s a whole course or degree that you or someone else knows about?
Thanks for your feedback, TorontoTim. I understand Financial Risks relatively well, I know basics of credit risks. However, one of the things that really attracts me to ERM is the high level analysis of a company, coming up with the big picture. I guess I might enjoy doing either consulting or establishing ERM in a financial company in the future. Do you think my view of ERM is unrealistic?
maratikus, there are two certifications, both very similar, PRM and FRM, both covering the basis of market, credit and operational risk. I have had good experiences with PRM, check out prmia.org. I have seen the FRM Handbook out on some of the torrent engines, that might give you a feel for what is involved, with no financial outlay. John Hull (of the Options book fame) has a very good book on risk management and financial institutions.
I think the post from FourCastles at least partly confirms my experience – there are lots of people who specialize in a particular type of risk management, and therefore lots of good courses and certifications, each of which applies to one particular type. That still leaves open the big question of whether ERM is a field/specialty/certification by itself. Are you familiar with the COSO framework for ERM? If not, I’d suggest taking a look at it: http://www.coso.org/Publications/ERM/COSO_ERM_ExecutiveSummary.pdf If I were the CEO of a company and my mission was to hire someone to oversee ERM, then I’d want someone who had a fair bit of risk management experience in a particular discipline. My own opinion is that it doesn’t make a lot of sense to have your ERM person be someone who lacks experience about risks, controls, etc. Having said that, a big firm with a big control management group probably needs some junior people, so there might be entry level positions in that area.
I guess it is true, to a degree, that the RM world is divided into smaller habitats with different cultures. If you are in market risk, for instance, it really helps to have some previous experience as a trader. Otherwise, you just will not fully understand the postions the traders are putting on and you will, most likely, not gain the respect of the traders. In other words, they’ll tell you to screw off, in exactly these words That will not happen to you in credit risk, where the atmosphere is a bit more finance/accounting/middle office-ish.
FourCastles, I have 4 years of futures trading experience, 2 years in FoF (including working on market risk of portfolios of futures and optioins). I got FRM certification a couple of years ago. My company hired consultants to help us establish solid ERM. The director of risk asked me to help and I’ve been reading lately about the COSO framework. TorontoTim, thanks for the executive summary - that’s exactly what I need. It’s going to help me understand what ERM really is better. I think the big difference between market, credit risks and ERM that ERM includes the big picture with the strategic view of the company. Maybe the best way to learn is to get familiar with the COSO framework. Thanks for your help, FourCastles and TorontoTim.
So, maratikus, how does your last post square with your first one? >> don’t have any experience, I’d like to learn about ERM and potentially get a job. My >>questions are: >>1) how can I learn? >>2) how can I get a job? is there a certification that might help me? I don’t understand, they seem to be contradictory.
don’t have experience in ERM
Oh, ok, I get it now.
maratikus Wrote: ------------------------------------------------------- > I think the > big difference between market, credit risks and > ERM that ERM includes the big picture with the > strategic view of the company. At the risk of putting too fine a point on it, I think that’s close; my understanding is that ERM includes market risk, credit risk, and other risks. In other words, it’s the whole ball of wax (including, as you pointed out, the strategic view of the company). Market risk and credit risk are subsets of ERM, I believe.