A corporation suffers as a result of the “impact of object uncertainty.” Companies and organizations frequently incur losses. Due to a lack of previous awareness of potential hazards and measures to reduce them. Risk Management Certification play a major role.
Since, these risks could include legal risks, credit risks, adversary attacks, and many others. The business of “risk management” emerges to have a thorough grasp of these hazards and identify them ahead of time.
Risk management is simply the identification, analysis, and mitigation of potential risk factors. Highly qualified, skilled, and trained professionals are required to do so. Hence, let’s dive deep into it.
What is Risk Management?
The process of finding, assessing, and controlling threats to an organization’s capital and profitability is known as risk management. These risks arise from a range of causes. These include financial uncertainty, legal liability, technological challenges, strategic management failures, accidents, etc. Risk Management Certification play a vital role.
A strong risk management program assists a business in considering all the risks it confronts. Risk management also investigates the relationship between risks and their impact. Therefore, it protects them from having a cascade impact on the organization’s strategic goals.
This holistic approach to risk management is referred to as enterprise risk management. Enterprise risk management (ERM) highlights the necessity of managing positive risk. It also focuses on internal and external threats. Positive risks are opportunities that, if not accepted, have the potential to create corporate value. It can also harm an organization. Hence, the goal of any risk management program is not to remove all risks. It is rather to preserve and create value for the organization. This is done by making prudent risk decisions.
A risk management program should be integrated into the overall strategy of the firm. To connect them, risk management professionals must first identify the organization’s risk appetite. Hence, the amount of risk it is ready to bear to achieve its goals.
The daunting issue then becomes determining “which hazards fit within the organization’s risk appetite. It also determines which of them need extra controls. It helps in taking appropriate measures before they are acceptable.
Every firm confronts the danger of unanticipated, negative occurrences. Such danger can cost money or force it to close. Untaken risks can also mean catastrophe. As companies disrupted by born-digital corporate giants like Amazon and Netflix can attest.
What is the significance of risk management?
Since, risk management has never been more vital than it is right now. Because of the increasing pace of globalization, the risks that modern firms face have become more complicated. New hazards emerge regularly. Many of these are related to or caused by the now-ubiquitous usage of digital technology. Risk specialists have labeled climate change a “threat multiplier.”
The coronavirus pandemic, which recently revealed itself as a supply chain issue at many organizations. It expanded into an existential threat. Therefore, as threatening the health and safety of their personnel, the means of doing business, etc.
Businesses made quick adaptations in response to the pandemic’s threats. However, in the future, they will have to deal with new concerns.
Companies and their boards of directors are reevaluating their risk management plans. They are reevaluating their risk exposure and investigating risk practices. They’re thinking about who should be involved in risk management.
Companies now employ a reactive strategy to risk management. This helps them to evaluate the competitive advantages of a more proactive approach. Hence, there is a greater emphasis on promoting sustainability, robustness, and enterprise agility.
Certifications in Risk Management
Risk Management Certification are mentioned below:
- Professional Risk Manager (PRM)
- Chartered Enterprise Risk Analyst (CERA)
- Certified Risk Managers (CRM)
- Financial Risk Managers (FRM)
- Risk and Insurance Management Society Fellow (RIMS Fellow)
Let’s look into the details of each certification
1. Professional Risk Manager (PRM):
The PRM certification is granted by the Professional Risk Managers’ International Association (PRMIA). In many ways, it is comparable to FRM. It is one of the popular Risk Management Certification.
The PRMIA community has grown tremendously since then.
Both the PRM and the FRM are regarded as the “definitive risk management” designations.
In 2014, PRMIA made numerous adjustments to PRM eligibility.
A professional with a Bachelor’s degree requires two years of experience. A professional without a Bachelor’s degree requires four years of experience.
Someone having professional designations such as CAIA, CFA, etc. does not need any prior experience.
Unlike in the past, when tests could be taken “on-demand,” now there are set exam dates.
The passing rate is 60 percent. All of the questions are multiple-choice. A candidate must pass all four tests – PRM I, PRM II, PRM III, and PRM IV – within two years.
PRM I is divided into three sections:
- Financial markets
- Financial instruments
- Finance theory.
This module covers fundamental financial concepts. This includes topics like futures, the value of money, interest rates, bonds, and so on.
Additionally, in total, 36 questions must be solved in 2 hours.
PRM II teaches the mathematical underpinning as well as statistical analytic skills.
The PRM III module focuses on risk management methods. It covers topics like market risk, operational risk, capital sufficiency, economic capital, etc.
Again, a total of 36 questions must be solved in 1.5 hours.
PRM IV modules focus more on case studies. It also focuses on assessing professionals’ comprehension of the PRMIA, code of ethics, conduct, and bylaws.2.
2. Chartered Enterprise Risk Analyst (CERA)
A CERA professional is someone who provides a comprehensive Risk Management Certifcation. . The individual combines qualitative and quantitative abilities to analyze hazards. Hence, this ability helps to take appropriate responses.
The Society of Actuaries (SOA) offers the CERA credential. Over the years, a CERA professional’s portfolio has developed a lot. From assisting customers in understanding risks to engage with organizations’ risk management strategies.
CERA practitioners operate in high-risk, competitive business contexts. They provide a complete picture of the risk profile.
These individuals have excellent ERM knowledge, ethics, and leadership abilities. This allows them to take on many jobs within the organization.
The individual learns in the CERA course;
- Aptitude for quality
- Quantitative ability
- ERM – both theoretical and practical
- Recognizing the actuarial approach to risk
- Risk management in general
It can be completed in a maximum of four years.
Chartered Enterprise Risk Analyst is less stringent than other finance certifications. Individuals with degrees in Finance, business, Economics, etc. have a better probability of passing CERA.
Certain abilities that can help are:
- Business acumen, as well as knowledge of Economics, Finance, and Accounting.
- Excellent written and oral communication abilities.
- Knowledge of spreadsheets, word processing, databases, and programmed statistics.
- Analytical and problem-solving abilities.
- CERA can be pursued on-the-job as well as through self-study with a particular emphasis.
Certified Risk Managers (CRM)
CRM certification is granted by the National Alliance for Insurance Education and Research to suitable individuals. It is one of the unique Risk Management Certifcation.
CRM-certified individuals are prepared to deal with risks and hazards.
It makes the individual aware of various risks. This includes operational risks, catastrophic exposures, fiduciary risks, legal risks, and other risks.
The CRM Professional’s responsibility is to identify such hazards. They are also responsible to defend the firm from them.
The CRM certification course is open to active risk managers.
People involved in the risk management industry, like insurance professionals, etc. can join this.
Individuals with existing jobs can apply for CRM certification.
To obtain the CRM designation, each of the five CRM courses must be completed.
Principles of Risk Management: measuring the participant’s general understanding of risk management.
Risk Analysis: It entails analyzing, quantifying, and risk possibility of data loss.
Control of Risk: It involves controlling hazards. By applying crisis management policies, conflict resolution, and Employment Practices Liability.
Risk Financing: This includes recognizing various financing options. This helps to ensure that operational losses are minimum.
Risk management practice: It covers designing and implementing the risk management professional process.
By completing all of the following CRM courses qualify the individual as a competent professional to handle risks.
Each of the five courses is distinct. They work together to provide the individual with a comprehensive grasp of the risk management industry.
They are rigorous. Those with 2-3 years of experience in risk management can only apply.
Classroom training, online training, and in-house training are options for completing the course.
Financial Risk Managers (FRM):
The Global Association of Risk Professionals (GARP) awards the FRM certification. It is one of the important Risk Management Certification in India.
Market risks and non-market financial risks are handled by professionals.
The first FRM designation was issued in 1997. Today FRM professionals come from Asia, Europe, and the United States.
GARP’s exclusive network has more than 30,000 members.
The exam assesses a person’s ability to recognize, analyze, and manage risks. This is a paper-based test.
There are multiple-choice questions, and the format is hands-on.
To pass the exam, the professional must commit at least 150 hours to each paper.
The Part I exam covers essential risk management topics. This includes financial markets, risk modeling, and quantitative analysis.
Over the course of four hours, you must complete 100 multiple-choice questions.
The Part II exam assesses the practical application of principles. It also focuses on awareness of market and operational risks.
Additionally, over the course of four hours, you must complete 80 multiple-choice questions. To obtain the certification, candidates must score at least 46 percent in Part I and 52 percent in Part II.
Risk and Insurance Management Society Fellow (RIMS Fellow)
The Risk and Insurance Management Society (RIMS) awards Fellowship to any risk management professional. Those wishing to improve their abilities and industry knowledge.
The RIMS Fellow confers a competitive edge over other colleagues.Hence, it also places the individual in a position of leadership.
Additionally, after completing the RIMS Fellow program, the person can add ‘RF’ next to their name as a stamp of approval. Therefore, this indicates that they have the necessary tools and abilities to manage risks.
RIMS Fellow Eligibility
There are educational and experience requirements that a candidate must have. They are as follows:
On the educational front, the individual must complete at least three courses. This includes courses like Risk Financing, Risk Assessment, and Risk Control.
A person having an Associate in Risk Management (ARM), Certified Risk Manager (CRM), etc. is qualified for the RIMS Fellow application. Therefore, finally, 5 years of industry experience is mandatory. These were the different Risk Management Certification.
What is Certified Bank Forensic Accountant (CBFA)?
Certified Bank Forensic Accountant is one of the oldest certification courses dealing with financial fraud. The material in this course is based on real-life fraud investigations. Hence, this course started in 2006.
Forensic accounting is still in its infancy in India. It is difficult to find and retain forensic accounting resources. The failure of banks and non-banking finance companies has resulted in a financial system crisis. Therefore, there has never been a bigger demand for market knowledge. It helps to meet the growing demand for forensic accountants in the country.
Since, Banks are hesitant to use outside parties to prevent, detect, and investigate fraud for unknown reasons. They have a higher level of trust in their internal audit teams to investigate fraud. Hence, the solution to this dilemma is the Certified Bank Forensic Accountant program.
How CBFA is a better option than others?
CBFA is a banking fraud certification course based on real-life case studies and conversations. This is the first of its kind program.
Failures of cooperative banks have raised awareness. Accounting and financial professionals must learn to identify and respond in various situations. Like signs of poor corporate governance. mismanagement, fraud, and other unethical behavior.
Additionally, a Certified Bank Forensic Accountant (CBFA) is a banker, bank audit specialist, or consultant. He is a person who has obtained forensic accounting training. Therefore, this helps him to become an expert in the banking industry.
Initially started in 2006. It is one of the oldest banking risk management certification courses.
This course will assist individuals in understanding ways of managing various risks. Risk like fraud, money laundering, and financial risks. Hence, this training is provided by teachers from the bank’s Credit Risk teams.
Why CBFA is considered a top Risk management course?
CBFA is one of the top risk management courses for the following reasons:
Since, it focuses on certain aspects of risk management that no other educational institute focuses on. Financial Crimes, for example.
It has a strong presence in the banking risk management sector. Hence, many of these certified individuals lead risk management teams in banks.
CA Mayur Joshi, a well-known ed-tech entrepreneur, created this course. He created it for India and provided it through Indiaforensic. Hence, he took it globally through Riskpro Learning.
Additionally, even though the certification name includes the word “bank,” this course is very valuable for people working in Non-Banking Finance Firms, Payment Gateways, and Fintech companies in addition to urban co-operative banks, private sector banks, and multinational banks.
The most significant advantage it provides is the cost-benefit analysis. Therefore, this course offers the highest ROI in terms of tuition paid and salary earned by students in organizations.