| Professional certifications are important to both the | | | | It's a good idea to have a general feeling of what |
| individuals that obtain them as well as the | | | | professionals hold risk management certifications - as |
| organizations in which those individuals work. In the | | | | well as what industries look for these professionals. |
| financial field, personnel involved in risk management | | | | The top industries with certified risk managers, and |
| can obtain several important certifications from two | | | | whose recruiters look for certifications, are banking, |
| major international groups. In today's uncertain | | | | academics, asset management, and government. |
| financial environment, professional certifications can | | | | There are many other sectors of the financial |
| go a long way to calm investors and regulators, as | | | | industry in which you will find certified risk managers. |
| well as restore faith in the financial system in general. | | | | Professionals who hold these certifications also hold a |
| But before we look at the organizational and individual | | | | wide variety of positions, from junior through |
| benefits of the most common risk management | | | | executive levels. The most common jobs held by |
| certifications, we should spend some time becoming | | | | certified professionals in the field are risk managers, |
| generally familiar with the certifications and the | | | | analysts, consultants, accountants, traders, portfolio |
| groups that offer them. There are two major groups | | | | managers, and even operations managers. |
| offering risk management certifications: the | | | | What exactly does the professional have to |
| Professional Risk Managers' International Association | | | | undertake in order to become certified as a risk |
| (PRMIA) and the Global Association of Risk | | | | manager? It depends on the program, but both the |
| Professionals (GARP). Both of these organizations | | | | PRMIA and GARP certifications are either strictly |
| show their certifications as widely recognized and | | | | structured or strictly unstructured in regard to |
| accepted, although the organizations approach | | | | preparation, and both organizations certify only after |
| certifications differently. | | | | examination. To obtain a PRM certification, the |
| PRMIA offers the Professional Risk Manager | | | | candidate must take four examinations, either |
| certification, or PRM. PRMIA calls the PRM certification | | | | separately within two years or all at once. These |
| "The Higher Standard in Risk Management" and is | | | | exams cover financial theory, financial markets, risk |
| very flexible on how professionals prepare for the | | | | management mathematics, best practices, ethics, |
| certification exams. The PRM is essentially a validation | | | | conduct, and case studies. PRMIA will help a |
| of skills that are most likely picked up in every day | | | | candidate prepare for the examination through a |
| work in the risk management arena. The certification | | | | variety of preparation courses and seminars, but the |
| does stress professional standards and integrity in | | | | candidate is not required to "officially" attend any |
| addition to skills and knowledge. Also, the PRM tests | | | | courses. In fact, PRMIA encourages organizations to |
| an individual's ability to not only know best practices | | | | use the exams separately as ways to test potential |
| but his or her ability to apply those best practices in | | | | job candidates or to test for promotional readiness. |
| the appropriate situations. The candidate must be a | | | | As we discussed, a PRM candidate can take the |
| member of PRMIA in order to sit for the certification | | | | entire battery of tests at one time, or can spread |
| exams, and, as in many cases with professional | | | | the four out over two years. |
| certifications, the candidate with other industry | | | | The GARP FRM certification is broad based, covering |
| certifications, such as the CFA (Chartered Financial | | | | market risk, credit risk, operational risk, and risk |
| Analyst) may have an easier time attaining the PRM. | | | | management in investments. There is only one exam |
| In the industry at large, hiring managers often use | | | | in order to obtain the FRM certification. The ERP |
| the PRM designation as a measurement for the most | | | | certification, on the other hand, requires about 250 |
| desirable risk management skills. | | | | hours of study to prepare and is also only one |
| GARP offers two major risk management | | | | examination. The ERP core competencies include |
| certifications, the FRM, or Financial Risk Manager, and | | | | physical energy markets, risk management |
| the ERM, or Energy Risk Professional. The FRM, | | | | compliance, financial trading, and valuation of energy |
| according to GARP, is one of the certifications that is | | | | transactions. |
| currently desirable to recruiters who are looking to fill | | | | We will discuss specific benefits of these |
| senior risk manager positions. There are only around | | | | certifications throughout the risk management series, |
| 18,000 FRM's in the world, which is a small number for | | | | but it's a good idea to consider why certifications |
| a professional certification that is recognized around | | | | might be important to your organization. A |
| the world. In order to qualify for the FRM, a | | | | professional designation carries proof of knowledge |
| professional must have two years related experience | | | | and competence in specific areas. Your organization |
| and must also be a member of GARP. | | | | can use the certifications as a way to market or |
| The ERM certification is obviously for energy industry | | | | prove competence in the field, and can even use the |
| risk managers, who must also have at least two | | | | possibility of certification as a way to recruit and |
| years experience in the field of energy risk | | | | retain the best talent. In today's financial market, a |
| management. These professionals must also be | | | | certification may show a higher dedication to ethics |
| members of GARP. GARP is in the process of | | | | and integrity, both on the organizational and individual |
| creating a continuing education program and | | | | levels, and this may help to satisfy regulatory |
| requirements for the ERM certification, which will | | | | agencies and shareholders. |
| most likely become a requirement in 2010. In the field | | | | The next step in this series is to look more closely at |
| of risk management, the ERM is one of the only | | | | the curriculum and study methods for each of the |
| designations that has or is about to have a continuing | | | | certifications, and determine why this is important to |
| education requirement. | | | | the organization. |