NEW YORK, Feb. 24, 2015 /PRNewswire-USNewswire/ -- The Global Association of Risk Professionals (GARP), a not-for-profit membership organization dedicated to preparing professionals and firms to make better informed risk decisions, today released the results of its 2014 Job Task Analysis Survey at its Annual Risk Convention in New York.
More than 1,400 risk managers globally responded to the survey, which is designed to identify the knowledge and skills necessary for competent risk management practices.
Key risk management tasks (count = 212) and skill/knowledge areas (count = 166) were separated into 10 domains: Risk Governance, Qualitative Analysis, Financial Markets, Modelling, Model Risk Governance, Market Risk, Credit Risk, Operational Risk, Enterprise Risk Management and Portfolio Management. Each respondent was then asked to rate the importance of each task and skill/knowledge area.
Key findings of the survey included:
- Communicating risk to stakeholders was considered the most important task for risk managers.
- Estimating, interpreting and reporting VaR followed, but being able to communicate and report the deficiencies of VaR also featured in the most important tasks.
- The role of regulation in risk management is significant, with 'Ensuring compliance with regulatory updates' and 'Calculate regulatory capital for market, credit and operational risk', both featuring in the top tasks for risk managers.
- Knowledge of basic risk types, Value-at-risk, liquidity risk, stress scenarios and measures of interest rate sensitivity all rated highly in knowledge requirements for risk managers.
Respondents were also asked what they expected to be the key changes in risk management in the next 2-3 years, and responses signposted the following themes:
- More regulation, although responses were divided over whether implementation would increase or decrease in complexity.
- Compliance becoming a greater part of risk management
- Greater emphasis on stress testing, and less on VaR
- Increased focus on, and sophisticated methodologies applied to liquidity risk
- Greater emphasis on data quality and information security.
Christopher Donohue, PhD. Managing Director of Research and Educational Programs, said: "The results of the survey really underpin what the industry knows; that good communication is critical to the risk management function. Effective risk management is not confined to understanding, modeling or testing risk – but in being able to communicate risk and its impact on the business, and being able to influence in that regard."
Dr. Donohue noted, "While VaR remains very relevant, what the survey also caveats is that risk managers must be able to understand and communicate its shortcomings. Additionally risk managers expect the trend away from VaR towards stress testing and other risk measures will continue, which is likely being driven by the regulators and Basel III expectations."
The Job Task Analysis Survey is an important instrument in the development of GARP's Financial Risk Manager (FRM) exam, for which there were a record 40,000 registrations last year. "The FRM program is designed to be benchmarked in real-world requirements, and the survey is just one way in which we validate this," said Dr. Donohue.
The Global Association of Risk Professionals (GARP) www.garp.org is a not-for-profit global membership organization dedicated to preparing professionals and organizations to make better informed risk decisions. The GARP risk community represents over 150,000 risk management practitioners and researchers from banks, investment management firms, government agencies, academic institutions, and corporations from more than 195 countries.
GARP's mission is to educate, train and set global standards in financial and energy risk management, and administers the Financial Risk Manager (FRM®) and Energy Risk Professional (ERP®) exams; certifications recognized and valued by risk professionals worldwide. GARP also helps advance the role of risk management via comprehensive professional education and training for professionals of all levels.
Risk taking is an integral part of business, and is a catalyst for growth. Developing a robust risk culture has many benefits, chief among them, empowering a company to pursue the opportunities that should ultimately enhance stakeholder value, while avoiding unwarranted risks or even catastrophic outcomes.
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SOURCE The Global Association of Risk Professionals (GARP)