About Professional Risk Management Certification
A risk management certification program allows a risk professional to stay up-to-date with the latest regulatory requirements and financial tools or methodologies that a corporation needs to prevent operating losses. A risk management certification curriculum also helps an employee learn about ethical guidelines that public officials mandate when performing tasks.
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Risk Management Defined
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Risk management is a business practice that helps top management identify, appraise and monitor risks implicit in a corporation's activities. To illustrate, assume that a bank engages in buying or selling stocks and bonds on securities markets. The bank needs to manage financial risks such as market and credit risks. A company also may need to conform to regulatory requirements such as rules promulgated by the Securities and Exchange Commission (SEC). Additionally, an organization ensures that internal procedures are adequate to prevent operational losses.
Education
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Academic criteria for risk certification may vary, depending on the program, company size and industry. However, most certification programs require, at a minimum, a four-year college degree in accounting, finance, risk management or auditing. An applicant with a liberal arts background also may qualify if he has significant practical experience. Certification guidelines for financial risk managers often encourage applications from individuals with quantitative backgrounds such as math, statistics, financial engineering or econometrics.
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Experience
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A professional risk management certification program typically requires a two-year practical experience in a risk field. A certification program, such as the certified public accountant (CPA) or certified internal auditor (CIA) program, requires a candidate to work for two years under the leadership of an experienced professional with an active license. A scholar also may qualify for certification if she substitutes teaching and research for practical experience.
Examination
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A risk management certification exam covers various fields. However, most programs focus on finance, economics and accounting and on reporting, auditing and regulations. For instance, the CPA exam tests an applicant's knowledge of financial accounting and reporting, regulations, business concepts and auditing principles. The financial risk manager (FRM) exam covers financial products, securities markets and regulatory guidelines. The CIA exam covers internal audit procedures, generally accepted auditing standards (GAAS) and risk and control self-assessment (RCSA) procedures that a company uses to document risks inherent in corporate activities.
Types of Certificates
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Types of certificates vary, depending on the industry served and level of seniority. As a practical matter, a professional risk manager who conducts external audits may need to hold a CPA license, which a state accounting board issues. An internal auditor could increase chances of career growth by receiving a CIA designation from the Institute of Internal Auditors (IIA). A technology risk professional may seek a Certified Information Systems Auditor (CISA) designation from the Information Systems Audit and Control Association (ISACA).
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