Philip Scott reviews the cross-practice initiatives put forward by the enterprise risk management committee
This month, I am reporting on the Enterprise Risk Management Practice Executive Committee (PEC) and its aims for the coming year. Risk management, in its myriad forms, is becoming more important in all our daily lives. The Prudential Regulation Authority (PRA) is taking shape with the appointment of Andrew Bailey, and the proposals for new supervision under the Financial Conduct Authority are being published.
This 'twin peaks' regulatory structure should greatly enhance the regulators' approach to tackling systemic risk and will consider supervision from a macro-prudential perspective. However, there will still be great reliance on internal risk management strategies, and the profession can do much to influence the discussions on such risks.
For those who work in the enterprise risk management (ERM) arena, the PEC is aiming to develop more thought-leadership events that will provide opportunities for debate of current issues and enable those interested to gain continuing professional development (CPD) accreditation.
A number of excellent speakers have already been booked for the Risk and Investment Conference, being held in Brighton in June. These include Julian Adams, director of insurance, PRA; Tim Harford, economist, author and the columnist behind the FT's 'Undercover Economist'; and professor Karel Van Hulle, former head of insurance and pensions at the European Commission. One area that is being looked at closely is the greater understanding of drivers from regulation and rating agencies that might affect future risk management practice for actuaries.
As risk management extends into all aspects of financial work, and following the Institute and Faculty of Actuaries' desired strategy in this area, the ERM PEC is intending to set up a number of cross-practice initiatives, which will assist actuaries who predominantly work in more traditional areas. Each of these initiatives will be tailored to the needs of each of the different collaborating PECs.
Jules Constantinou believes success will be measured by the extent to which links are established between the ERM group and the other PECs and the integration of risk management resources and material in the other PECs' research and CPD programmes.
The ERM research and thought leadership committee intends to develop and deliver key member-led research that influences not only the profession but other risk groups. Its priorities are to develop:
> research topics for actuaries working in ERM;
> risk management topics as part of the cross-practice initiatives; and
> broader research topics that enhance the actuarial profession's reputation in this area.
Also important is developing links with other like-minded UK and international societies. It is hoped in the near future to plan joint events and undertake research with the Institute of Risk Management and the Professional Risk Managers' International Association.
By forging links with overseas actuarial associations, such as the Society of Actuaries and the Casualty Actuarial Society, as well as other groups in the international risk management community, we can identify any special needs of overseas members in the areas of risk management. This will also enable us to identify areas that could be useful in the work undertaken in the UK. The more we can do this, the greater our chance of exposing actuaries to disciplines and thinking from other risk professionals, while at the same time broadening our influence.
The Chartered Enterprise Risk Actuary (CERA) qualification continues to expand, and over 1,400 students have completed the exams. One aspect of feedback that particularly stands out is that the course teaches people to speak the language of the board. Only by being able to do this can we hope to have more influence and authority in the future.
Following the award last year of the CERA designation to 10 actuaries who are considered thought leaders in the field, applications are being accepted for 'very experienced practitioner' designation. Senior risk professionals are invited to apply for CERA status by virtue of their work and experience in the field instead of taking the exam.
The PEC also aims to work with other practice areas to help members transfer into chief risk officer (CRO) and other senior risk-related roles. We have established an actuarial CRO group to provide a forum for the most senior risk actuaries in each firm to share their understanding and knowledge of ERM for the benefit of the profession as a whole.
The year ahead will be challenging for the ERM PEC as it drives forward its strategy, but I am convinced that it will make much progress with its thoughtful initiatives and that we can rely on it to deliver solutions to meet the future challenges of risk management.