With the ever evolving
and changing needs of companies in managing risk, how can risk managers better prepare
themselves for those growing demands and enhance their careers in the
process?
Risk managers are facing a growing challenge to close the
gap in their typical skill set between what has made them a success under old and shifting
paradigms and what they need to be successful in the future.
At the core of the
challenge are both opportunities in terms of experience and education. And
naturally, one is easier to address than the other.
First the hard one.
No matter what one
might read or hear, career development at most companies still operates as it
has for some time now; that is, the functional bucket you choose-or fall
into-is the one you stay with for the life of your career. This has been
especially true in risk
management, as risk managers
are most often still considered technical specialists with a narrow and unique
focus-insurance-related matters.
This approach is
obviously constraining for those of us who want to broaden our perspectives
and horizons. It's great to be viewed this way when others see you as the
only reliable source of expertise in a
function, yet not so great when the firm needs a continuously rotating series of
pinch hitters and back-ups.
When we accept this
view, we become seen as less flexible and perhaps even less useful to people
planners. But we can manage this career risk in ways not dissimilar to the model we apply to
everyday risks to the firm. Before we go there, let's look at the other
approach; a company
of generalists.
A smaller set of organizations
uses the generalist approach to career development and bench planning by
assuming that most management personnel should be able to do each other's
jobs in a
sink-or-swim fashion. GE, PepsiCo and others have practiced this in numerous
ways and to varying degrees of success.
In the end, it is
equally constraining for one who loves what they do in a functional specialty and wants
to develop that to the fullest. Ironically, it is this approach that can
actually work to the advantage of a
dedicated "risk manager"
who wants to be better prepared to work under the emerging paradigm of
enterprise risk
management.
Why? Quite simply, the
more time you spend rotating around core functional specialties within a firm, the better able you will
be to practice enterprise risk.
You'll have a broader understanding of the
key aspects of company operations that present the firm with the risks that
must be addressed. The inherent problem of course, is how to be "the risk manager" for such a firm and yet participate in
this development approach. After all, the firm may end up preferring to
leverage your contribution in another specialty area or may consider you part of the
small bench for the most senior posts (in which latter case being the "risk manager" may just
quickly give way to such higher aspirations).
So what if you're
caught at one end of this spectrum or the other, or someplace in-between as
most of us are?
Well, most of us are
somewhere in-between and this is actually the best place to be. It gives you
the most flexibility since you're not caught in a strict view with little wiggle
room. Wherever you are in this regard, you need to step out and get involved
in other functions, especially those that are part of the core competencies
of your firm. Within those, you'll find most of the risks that need to be
addressed.
Some ways to get into
these areas are by: joining task
groups and project teams such as for new products, equipment or services;
investigating and reporting on things that others haven't even thought of
yet, that could be of interest to management such as a new product, service or process
that could contribute to shareowner value; or informally offering support for
the key initiatives of others offering your opinions, resources and expertise
to make them more successful.
Of course there are
many other ways to increase your visibility, but the key is to take the
initiative and set yourself apart. It's important to remember as well, that
this process doesn't require being a
superstar. Becoming distinct from the pack is actually not as hard as some
think, but it is crucial to risk
managers of this era
that want to gain responsibility and recognition.
Another
"must-do"-no matter how your company operates along the development
spectrum-is to begin informally making your case for risk-related concerns
outside your defined area
of accountability. Make your case to key decision makers, while in the
process, developing key relationships with those same power brokers.
Make sure your case has
clearly defined metrics and is not just "pie in the sky" thinking.
Make sure you think through whatever it is you will present and be prepared
to answer the hard questions that will come. Not being prepared will engender
sure failure and tarnish the reputation you're trying to build, even though
the approach itself shows initiative on your part.
Lastly, in this realm
of getting the right experience, don't underestimate the possible need to
plow your trade elsewhere. There are no shortages of firms that will rebuff
most if not all of the initiatives described above. These rebuffs are
reflective of an insular and rigid culture that is unlikely to be moved much
by larger group efforts, much less those of a single miscreant like the risk manager.
While I believe that in
the right environment and with the right encouragement, you can gain much
from self-initiated efforts as above, there are times when you'll simply need
to move on to advance your interests.
Although the thought of
moving on may strike fear in the hearts of many, be prepared to consider this
alternative when you are faced with a
string of defeats and disinterest that becomes too long. Forget loyalty as a first priority; the employment
relationship is fundamentally an economic transaction and therefore driven by
market and other forces that, for the most part, we don't control, the key
one being supply and demand.
Let me suggest that in
today's era of
mergers and acquisitions, the supply of traditional risk managers exceeds the demand,
a hard cold fact of
life in the late '90's. As a
result, it becomes all the more important to improve your marketability to
leverage economic realities to your favor.
This is best
accomplished as an additional strategy to considering alternate positions.
Simply moving to where you perceive the grass to be greener is often an
ineffective tactic. However, it can pay when, for example, you are able to
start a risk
management operation from scratch and/or forging this in an emerging industry
such as e-commerce.
Meanwhile, whether you
move or not, you should be assessing your credentials for their applicability
to your current job requirements and, more importantly, to the job
requirements of the future, which are continuously being redefined.
What about education?
There are of course many ways to prepare yourself to be a more effective practitioner and
different employers will value different credentials. Notwithstanding high
impact results, which can get you further than any other component part of
what defines your market value, I strongly endorse a set of educational credentials
that displays your broadness and diversity. So, while an undergraduate degree
in business may be preferable, most undergraduate degrees are an equally good
start.
The important part
comes after that. It is then that I recommend you focus on an MBA if you have other than an
undergraduate business degree. I would then suggest you move right into
getting specialized risk
and insurance education such as the Fellow in Risk Management, or FRM, from the Global Risk Management Institute;
Associate in Risk
Management, or ARM, from the Insurance Institute of America; Chartered
Property & Casualty Underwriter, or CPCU, from the American Institute for
CPCU; or other Insurance Institute type certifications.
Regardless of
undergraduate specialty, I would strongly recommend those who want to be
senior risk manager
one day, secure both an MBA
and the FRM at some point in the first 10 years of their careers. That is
when it will have the most marketability.
Beyond formal degree or
certification programs, don't overlook the many opportunities to practice
continuing education. Selective use of seminars and short courses need to be a part of your total strategy for
career and self-development. The Risk
& Insurance Management Society Inc., whose primary mission is supporting
the risk management
discipline through education, offers many opportunities to develop yourself
and improve your market value. In addition to the FRM program, RIMS offers
numerous 2- or 3-day seminar courses, current topic and basic skill
development workshops, online asynchronous learning and, of course, more than
150 educational seminars at the annual RIMS conference in the Spring. Take
advantage of these and the many other opportunities to continue your
education available from other sources. The best risk managers never stop learning
and developing themselves.
So what steps should
you take to address both experience and education? Why not apply the risk management model that we
practice daily. That is: identify the risk/requirements that need to be
addressed; treat your findings with a
thoughtful strategic and tactical plan, no matter how informal; measure the results/progress
against the intended strategy and tactics; and monitor/implement the needed
changes to get you to the better result.
When you think about
it, life is just a
series of risk
management decisions to which this model can be consistently applied.
