The need for increasingly open communication and collaboration between finance and procurement is well established on these virtual pages here at Spend Matters. So too is the expanding role of risk analysis and assessment as volatility in world markets and our supply base have become critical to survival and success. While the number of available tools to augment this process continuously increases, the proof in the pudding is largely dependent upon the credibility, communication and organizational acceptance of the gleaned information.
As the global economic crisis has increased the demand for deeper risk analysis, the credibility of those who compile and analyze the volumes of data is also being scrutinized. "With the profession in the spotlight," as reported in this morning's WSJ, "several industry organizations are vying to provide a standard certification for the field, which the U.S. Bureau of Labor Statistics predicts will grow in the next several years, in part due to the increasing complexity of financial transactions." As with most business specialties, "no certification is required to practice risk management" according to The Journal, but certification "is a way of getting more familiar with the concepts."
The article focuses on financial risk certification: "The tests, dubbed the Financial Risk Manager exam and the Professional Risk Manager certification, require about 500 to 600 hours of study, and are passed by roughly half or fewer of those who take them, the groups say. Fees for the two-part GARP [Global Association of Risk Professionals] exam total $1,250, while the Professional Risk Managers' four-part test costs $500." Also mentioned are the "RIMS Fellow, the Chartered Enterprise Risk Analyst, the Certified Risk Manager and the Associate in Risk Management . [that are] risk management designations more suited for enterprise risk managers--who work more broadly with risk issues across companies, rather than just in finance."
In yet another WSJ column in today's paper, Jeremy Greenfield interviews Gideon Pell, a senior vice president and the chief risk officer at New York Life Insurance Co. [who states] "You have to have a combination of the hard skills and the soft skills to do the job well. I like my team to get a designation as a way to get more familiar with the concepts of risk management, the relevant case studies and lessons learned from past successes and failures."
The fact that neither article mentions the accelerating role of risk management as it pertains to procurement -- nor the position of CRO -- is evidence that there is far more corporate integration needing to be accomplished sooner rather than later. Pell is spot on when he concludes, "If you're not able to influence the organization that you're in, you're not going to be effective at your job. To be an effective risk manager, you have to have a good understanding of the business. You've got to have sound judgment and you have to be able to communicate effectively up and down the organization." This degree of effectiveness requires a receptive organizational structure that remains far too rare in most corporate hierarchies.