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The Actuary The magazine of the Institute & Faculty of Actuaries
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Careers: Fancy working in ERM?

With some traditional areas of employment expected to show signs of contraction, actuaries have been looking to wider fields for opportunities. One such alternative might be enterprise risk management (ERM) — an area earmarked for growth, particularly within the financial sector.

The essence of ERM is the need to manage risks holistically in a fully integrated framework, across all different risk types and the different functions/companies within an organisation. It encompasses the full risk management cycle, through identification, assessment, mitigation, monitoring and so on. ERM also reminds us that good risk management is not about making risks go away. It is about understanding the risks to which the organisation is exposed and then dealing with them in the most appropriate way, consistent with its risk appetite.

It is vital to remember that risk offers the potential for upside and strategic growth. Strong ERM practices allow organisations to take best advantage of those opportunities. An increasing proportion of UK members list their area of work as ‘risk management’, a trend that we anticipate continuing.

UK Actuarial Profession member data
Actuaries work as chief risk officers and consultants developing ERM capabilities in companies, including integration of pension scheme risks into overall risk management programmes. Actuaries also work in rating agencies assessing ERM capabilities, in risk modelling and research and in project management and appraisal in various industries, including energy.

The actuarial skill-set is ideally suited to ERM. The training gives expertise in insurance and financial risks and, increasingly, we are gaining experience in other risk areas, for example, operational risk. We have experience dealing with various regulatory environments and with the regulators themselves. Our analytical skills can be applied to risk assessment and modelling. Our training and professionalism places emphasis on the need to apply judgment and the importance of making balanced decisions. We should not underestimate the value of being part of a recognised and respected profession that brings an overlay of standards and ethics to support our clients’ and employers’ confidence in our advice.

Of course, we cannot expect to say: “I am an actuary, I can do this”. We need to ensure that our training is thorough and that it is well recognised that we have the necessary qualities and technical skills.

The international Chartered Enterprise Risk Actuary (CERA) risk management qualification has been developed to support this aim, combining strong technical skills with professional standards of conduct. As many as 14 IAA member associations signed up in November 2009, including the UK’s Faculty and Institute, and the UK is privileged to have been awarded the role of worldwide administrator.

CERA will be awarded through those participating associations that meet the minimum educational standards, both in terms of syllabus content and quality assurance. The UK’s ST9 examination (enterprise risk management specialist technical) has been developed in conjunction with the CERA minimum learning objectives and, subject to validation, we expect it to gain accreditation. The timetable for this process is not yet known, but the aim is to gain accreditation for the first ST9 exam in April 2010.

Accreditation would mean that actuaries who gain an associate-level qualification and also successfully complete ST9 will be eligible for CERA. Fellows would also be eligible for CERA on passing subject ST9 — which also offers a great CPD opportunity.

The CERA brand is already known, having been developed and marketed by the Society of Actuaries in the US. The new international treaty should broaden its recognition further, and will help the Profession with its objective to have actuaries recognised as the leading professionals in the field of ERM. So start studying now!
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Lindsay Smitherman is a staff actuary working for the UK Actuarial Profession