I’ve been writing this blog almost every day since August and I’ve been rewarded by your positive feedback and over 6000 hits. In this period, I’ve reported about many ERM-related events: the S&P calls ERM “highly important”; while others suggested ERM should be a “way of life”, called it “vital”, said it would be a great idea at some banks, and declared it is the “forth most influential management idea of the last decade”. It seems like lately everyone is talking about black swans.
Additionally, Aon, actuaries and other authors published documents, surveys and books, the Government of Canada has issued an RFP requiring contractors be certified in ERM, ISO 31000 was published, and the SEC issued new enhanced proxy disclosure requirements and rules around the Board and oversight of risk.
So what I would like to know is… where is the demand for ERM practitioners? Where are the jobs?
Several years ago, there was a steady stream of contractor opportunities for Sarbanes-Oxley (and more recently IFRS) work. Accountants were doing a brisk business as independent contractors. Why are we not seeing the same demand for risk management practitioners, especially from non-financial organizations?
To provide some context, I also live in Toronto – one of the largest cities and financial centres in North America. Toronto is home to banks, insurance companies, pension funds, mutual fund companies and hedge funds. Hundreds of non-financials have their headquarters here as well. This is not Iowa.
And although I see the usual demand for financial risk services at financials, I would like your thoughts about demand for risk management services especially at non-financials?
What are you seeing in your cities? Please leave your comments (along with your location.)
Update by Trevor Levine: I posted this question on a LinkedIn discussion group as well and the following comments were generated.
Jorgen Ellingson writes:
The fact that there is no regulatory requirement for ERM in the non financial sector means that companies have to take it upon themselves to find the value in ERM and determine how it’s best implemented. In this regard ERM may be no differrent than any other strategic initative/methodology e.g. balanced scorecard, six sigma, etc.. the big question is will it work in my company. I work in the middle east which has seen very few new ERM jobs in the last 8-12 months. However risk positions in the banking sector are starting to pick up which may be a bellwether for risk roles in non financials. we’ll have to wait and see.
Kevin Ruiz writes: I agree with Jorgen. ERM opportunities are few and far between. Organizations do not see ERM as compulsory yet, although I think that is coming down the tracks. I’ve spent a lot of time and effort trying to convey this message to potential clients (and potential employers for that matter), but until there is a regulatory requirement for moving beyond siloed risk management, it is up to those of us trying to light fires under the CFOs and CEOs that ERM is not just the NEXT step in risk management, it is the FIRST step towards true risk management.
Nevil writes:
Trevor:
I am asking myself the same question. A lot of other people seem to be doing the same thing too. I talk to the major accounting firms and to the extent they are gearing up, they are doing on a speculative basis i.e. they don’t have anything on their books but they feel the need to have people out there beating the bushes
Good lead – let’s see what comments it generates
Thanks
Nevil
Sonja Albano writes:
Great posts, I am also near the Toronto area and agree the ERM roles aren’t highly posted. Given the new economic climate for jobs I am finding this area does not have many direct opportunities although most companies would benefit. What I am seeing is that senior level risk manager roles in some companies get phased out and job share of tasks are given to various silo departments, particularily if there is cross boarder companies. This is a prime result of cut backs and economic times my friends. We all agree the strong VALUE of ERM brought to the table, but because it is not regulated sometimes it is difficult to convince the CFO’s and CEO’s. Hoping this will change in the future!
Nitin says:
This is interesting discussions. I am from Mumbai-India. My views are
1) I agree that ERM in non-financial area is not picked up yet and believe that it is mainly due to lack of any compliance / regulations.
2) Generally businesses will spend $ if the initiative is needed from compliance point of view or they feel that there is an attractive ROI.
3) If such initiatives are NOT mandated the organizations follow different styles for decision making i.e. if they are innovative, they will venture into new initiative. If they are leaders, they will take risks in trying out new concepts and if they are followers, they will wait to hear success stories before they embark on the new initiatives.
4) Most of the companies are of ‘Followers’ especially in today’s economic situation, their investment in new initiative will depend on if they are aware and convinced of such success stories.
5) Still many people understand that Risks are ONLY negative and should be avoided / eliminated. In today’s situation active risk management can be linked to growth because risk simply means uncertainty and can lead to negative or positive impact.
In view of this, I feel that if such success stories (ERM implementation benefitting to Companies) are published more widely and loudly, there will be a good chance that companies may get interested. So I feel experienced and successful practitioners of ERM will have a critical role to play in this phase.
Hope things will change over period !!
Regards,
Posted by Nitin Patwardhan
I have worked in the financial sector now for going on 20 years, and there is something very different about this recession, at least as it applies to financial risk analysis jobs. My key observation is that hiring is unlikely to pickup until after the Congress passes whatever regulatory reforms are to come. This fact is causing banks to take a “wait and see” perspective, which is indirectly slowing other ventures from expanding or growing. We need to see the financial sector “settle down” back into a steady routine where the effects of unknown legislative changes are not constantly front of mind for bankers and investors in general. For example, the President has announced support for a transaction tax in finanical services — what does that mean? There is also a movement afoot to limit the size of banks — again, what does that mean? Until these issues are resolved, I doubt that hiring will pickup in the risk mangement field. Said another way, no one is taking any risks these days, so why invest in risk management. The problem is very real at this point. Thank you for the opportunity to comment, and visit my website and blog at: http://www.mckibbinusa.com.
Update by Trevor Levine: Some comments left on LinkedIn discussion group reposted here.
Guan Seng Khoo, PhD says:
Hi All, the comments above are very appropriate and highlight the challenges in trying to “evolve” the silo-mindset. I had the opportunity of a far-sighted boss who gave me the leeway to implement an ERM system in 2004 when he appointed me Group CRO of over 10 subsidiaries. Even with the support & backing, breaking down boundaries and achieving alignment to implement ERM is an incremental effort, as a fair bit of education is required to elucidate how ERM is ultimately about risk-return tradeoffs and when you are managing several subsidiaries or business lines (aka “asset classes”), you have to think like a portfolio manager aiming to attain the most optimal risk-based performance (returns). Happy New Year. Best,.
John Glenn, MBCI writes:
Define “ERM”
The consensus above seems to be what is otherwise called “enterprise business continuity.” When searching the job boards for “risk management,” more often than not the hits relate either to (a) insurance or (b) medical operations. There are more (appropriate-for-me) hits when the search is for “business continuity” (although all-too-many really are no more than IT disaster recovery which is neither).
ERM/BC **seems** to be recovering from the economy-driven slump, but until management realizes that (a) it’s not just overhead and (b) it offers more than “just” risk management – process re-engineering/business analysis are integral components of ERM/BC – it won’t be a “must have” function in most organizations.
John Glenn, MBCI
Enterprise Risk Management practitioner looking for work in/from
Hollywood/Fort Lauderdale FL
JohnGlennMBCI @ gmail dot com
Update by Trevor Levine: Some comments left on LinkedIn discussion group reposted here.
Charles Westrin writes:
All good comments. From my perspective, there not only seems to be a shortage of quality ERM jobs available but also quality talent to fill those jobs at the manager/associate level. While I was in the consulting realm of the world, I had multiple clients in different cities (e.g. Miami, Chicago, Dallas, Charlotte, Phoenix) undertake a search for individuals to support their ERM process, who were unable to find prepared candidates. In general, these positions where at the Manager level and would be supporting a VP or Director role that had already been internally filled. These were companies who were willing to make the investment in ERM through working with a consultant, and had identified their own internal owner, but could not find viable candidates to fill the “next layer down”. What this indicates to me, is that not only are there too few jobs at the Director/Executive levels (which has been thoroughly discussed in this string), but there is also a vacancy of available talent at the entry level positions who are ready and willing to be groomed for the next level. Granted, until there is enough buy in to invest in ERM positions at the executive levels, potential ERM practitioners early in their careers are more likely to opt for the traditional accounting/auditor/IFRS consulting roles since there doesn’t seem to be any long term career opportunities. Ultimately, if we can’t attract the right talent early in their careers, and show that there is long term career potential, it will be difficult to continue to grow the profession.
Update by Trevor Levine: Some comments left on LinkedIn discussion group reposted here.
Larry L. Baker writes
I have spent the past 14 years, fully dedicated to Enterprise Risk Management (ERM) through two Big 4 CPA firms, a global risk management firm, and now a small local firm. I continue to be somewhat puzzled by Corporate America’s hesitancy to fully embrace ERM. Although there appears to be some demand for ERM consultants/services and ERM Corporate employees, the career opportunities seem to be fairly limited across the US. Generally speaking, the large consulting firms have struggled to create and sustain a profitable ERM business, while Corporate America executives have struggled to understand the true value of ERM. Yes, even after 15 years of trying. [Remember, it took the “SOX mandate” to finally get Corporate America to seriously consider the COSO Internal Control Framework, which was first released back in in the early 1990’s.] Back to ERM, some US companies appear to be doing just enough to temporarily satisfy the Board’s interest/request for some type of ERM effort. Therefore, Corporate Executives are hesitant to hire ERM employees or ERM consultants in a significant way. On a positive note, other companies are making strides with ERM, and therefore, hiring a few ERM consultants and/or ERM employees. In fact, some global consulting firms appear to be cautiously ramping up again with some ERM specialists. Hopefully, both will figure it out this time. If so, perhaps ERM consultants and ERM employees will be in great demand. Unfortunately, I can not predict when that may happen. And, beware my good ERM friends, as there always seems to be the next “corporate mandate” looming around the corner. It appears this one may be called, “IFRS Reporting.”
Update by Trevor Levine: Some comments left on LinkedIn discussion group reposted here.
David Seibert writes:
I live in the twin cities of Minneapolis and Saint Paul Minnesota. Outside of the largest banks, insurance companies and multi-national companies, ERM is non-existent in this area. I voluntarily left my last position to pursue a new career in Enterprise Risk Management because I fully expected the demand to materialize for the very reasons you posted in your blog. My extensive networking in this metropolitan area has taught me that the demand has unchanged over the past few years and it’s not likely to change soon.
Nevil Ede writes:
I would just like to endorse Larry’s comments. My interest lies predominantly in the non-financial arena, and while I have some seen stimulus of interest following S&P’s qualitative appraisal of company’s ERM initiatives, I also believe that a “SOX type mandate” is going to be required before we see anything like wholesale adoption.
I also agree with Larry’s IFRS comment, although like all other major compliance regulation, this too in my opinion, is in and of itself is another compelling reason to begin to consider the benefits of ERM.
Duane Scott writes:
To me, you won’t see ERM surface outside of the financial industry in prominence until a cataclysm such as the sub-prime/credit crunch hits someone outside the financial sector.
What is worse, is that some companies are implementing ERM as they see it, which is more of a business continuity, operational risk management organization that may or may not look at the financial risks (market, credit). The concept of aggregation of risk, combining, disassembling, etc to determine the most appropriate risk mitigation activities is still not considered.
I’m in the same geographical location as Sonja, the GTA, and there is not much in terms of real ERM positions that I have seen, and some of the people that I have talked to in risk management still have a silo approach to it.
Mike Tannenbaum writes:
I too see a limited number of non-financial companies hiring ERM professionals but, the number does seem to be growing ever so slowly. Seems to be a disconnect with what we perceive as the value of ERM and what companies are willing to invest in. Question, for those companies that might like to hire early/mid-career ERM practitioners, what skill sets should they be looking for?
Duane Scott adds:
To Mr. Tannenbaum –
I am enrolled in the certification program in Enterprise Risk Management at the University of Toronto. In speaking to one of the professors, Ahad Hussien, CIO of UBS in Canada, he says the major interest in ERM is from the financial sector right now, and that they are the ones pumping the seed money into these types of education programs. So the skills they are looking for tend to lean towards financial risk identification and management.
Richard Cromwell writes:
Greetings! All very good comments. I agree with the “regulatory driver” aspect in that The old saying: “You get more with a gun and a smile than just a smile” translates to the affect any change in regulation requiring ERM would have on an industry. I think ERM will get to the top of everyone’s list over the next year or two as they make the connection between the strategic, assumed and operational advantages of ERM has on their balance sheets become clearer.
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