Hitting The Books

Risk & Insurance, May, 2000 by Lawrence Richter Quinn

Says Delta's Duncan: "We're diverging in two different directions. There will be two different groups involved with risk management. One grouping will involve those involved with traditional insurance, those handling loss control, worker's comp, that sort of thing. I think that has limited upside potential from a career standpoint. But there will always be a role here, and it has to get done.

"The second class of people will have more advanced risk financing backgrounds, ones where risk financing and treasury types of functions are combined," says Duncan. "That's where there's a substantial amount of value that can be added. There are a small number of people who have these jobs at the moment."

Not everyone sees such rigidity as the only way to go. "I would suggest that the future is not necessarily one defined by the chief risk officer," says Tricon's Mandel. "Instead I would suggest that in most industries people will be specialized within the area of risk management, working in matrix teams.

"Even if we do end up with chief risk officers," Mandel says, "I don't know that you need to understand everything about derivatives and hazard risks at the same time. What you need to know is that the basic risk management model applies to everything anyway. That model includes identifying risks, assessing and controlling them, and treatments, whether they involve financing or other solutions. Then you measure your results and modify them accordingly."

For the moment, these issues aren't on the minds of most students and industry professionals. Instead, they're pleased that pay is up and more in line with what other treasury executives are making. They also predict that the move to enterprise risk management will create more opportunities for professionals, and that corporations will have no choice but to recruit directly from campus risk programs if they want to stay competitive.

"I understand in my conversations with MBA students at Wisconsin that pay is now comparable to what other highly paid MBAs are being offered," says Jim Swanke, 42, a principal at Tillinghast-Towers Perrin in Boston who has an MBA in risk management and finance from Wisconsin.

"When I was graduating, the pay was a step below what those with other concentrations were making, but now it has caught up. People are seeing value to this discipline and are now willing to pay for it.

"The bottom line," says Swanke, "is that risk managers are being asked to remove uncertainty from the bottom line. As they address enterprise risk, they're enhancing shareholder price. And that's what Corporate America cares about."