GEORGIA STATE OFFERS ERM PROGRAM

Rough Notes, Jan 2006 by Moody, Michael J

Professor sees growth coming from banks' leverage as lenders

One of the roadblocks to successful enterprise risk management (ERM) implementation has been a lack of comprehensive educational opportunities for persons desiring information on ERM. However, over the past couple of years, several programs have emerged that can provide a good background. An early group that has worked to advance the ERM concept has been the Society of Actuaries (SOA). It has had several successful conferences over the past couple of years, and its 2005 event was appropriately named "Turn Risk Into Opportunity." The conference provided a good mix of ERM topics for both the financial services industry as well as non-financial services companies.

In addition to SOA, the Risk & Insurance Management Society (RIMS) has also provided some ERM offerings, most notably at its annual conference. These have, however, been quite limited in the past. However, the 2006 RIMS conference, to be held April 23 - 27, will have a separate track for ERM, and they are planning a number of ERM specific sessions. With the exception of these two venues, there have been surprisingly few ERM educational opportunities, but that is changing.

Getting serious

To date, most of the educational opportunities have been limited to a one- or two-day event, or several specific sessions at a longer conference. But now there is a comprehensive ERM offering being provided by the J. Mack Robinson College of Business at Georgia State University. Georgia State has a long involvement with both risk management and actuarial sciences and recently celebrated 50 years of excellence in risk management education. In addition, the university was one of the first educational institutions to actively promote the ERM concept.

The primary thrust of Georgia State's current ERM educational efforts is the ERM Executive Education Program that is offered by the Center for Enterprise Risk Management and Assurance Services (CERMAS). The program is designed for middle and senior level management who are responsible for the development of their organizations' ERM programs. The program centers around four week-long sessions that are provided quarterly. CERMAS has designed the program as a comprehensive course of study that depends heavily on a case-based approach and is very interactive. Its primary focus is to provide the latest thinking with regard to ERM for non-financial companies, and includes the following four segments:

* Framework for Enterprise Risk Management (week one)-This session explores why managing risk is important, not just for survival or as a response to legal requirements, but rather as a method of gaining a competitive advantage in the marketplace.

* Risk Measurement (week two)-The models used to quantify corporate, financial, and operational risks are the major focus of this session. Emphasis is placed on integrating risk measurement analysis into other corporate decision-making.

* Control and Monitoring (week three)-The variety of internal controls used in ERM are reviewed during this week. Special attention is given to Sarbanes-Oxleys Section 404 requirements (the attestment feature that is required by top management) and COSO recommendations. Analysis of major traded and over-the-counter derivate products, as well as non-traditional risk management products including alternative risk transfer products, contingent capital facilities, and other hybrid insurance/capital market products is provided in this section.

* Pulling It All Together: The Road to Enterprise Risk Management (week four)-This session focuses on the efficient design and organization of a firm's ERM program by integrating the various topics analyzed during the previous three sessions. A key aspect of this session is a group analysis of a complex case study that includes a complete review of a hypothetical firm's risk management program and presentations of proposals to re-engineer that function.

CERMAS has completed one full year of the program and is just beginning to start its second group of students. The program opened to rave reviews where past participants found both the content and the instructors of great value.

In addition to the ERM Executive Education Program, CERMAS also provides periodic ERM roundtable discussions. These regularly scheduled presentations are directed at senior risk management professionals and are designed to provide an open dialogue between risk practitioners across a wide range of industries. The specific purpose of the sessions is to discuss and share ERM best practice approaches, and raise issues that require further research.

These periodic roundtable presentations are designed to help participants remain at the leading edge of ERM research, developments, and thinking. Roundtable members must actively participate in each session and also provide their perspective and insight into some of today's most pressing ERM issues. Participation in the roundtables is by invitation only. Several roundtables have taken place thus far and have tackled such issues as a response to the COSO exposure draft ERM Framework, and Enterprise Risk Management: Lessons from the Field.