Operational Risk Management Certification – How to Get It

How to obtain operational risk management certification

A career in operational risk management shows good prospects.

Operational Risk Management Certification – How to Get It

In other to get a certification in the field of operational risk management, there are fundamentals you need to be aware of, especially if you want to pursue a career involving risk management. Such basics are what we are sharing in this post, as well as how to become an operational risk manager with certification.

What is Operational Risk Management?

Operational risk management is the general name referred to the cyclical process that includes risk assessment, risk decision making, and implementing risk control measures to ease or avoid risk.

Risks, which is dealt with in this process may arise due to failed internal process, systems, or even people.

It may also form the base of other risks like reputation risks and regulatory risks which are fundamental to financial institutions, and so the risk managers or officers are responsible for managing the employees, customers and character, assets, and even the interest of organizations.

Operational risk can be very costly to organizations if not managed well, and have become a discipline which has continued to develop quickly in business decision making.

Operational risk exists in businesses of various sizes; ranging from complexly structured financial institutions to even community banks, and examples of risks which may be encountered include computer hacking, fraud (internal and external), and failure to implement certain policies which resulted in losses.

Here, the risk manager is expected to set forth mechanism to understand and identify operational risk, and make better informed decisions by observing past risk events and observation of patterns of these behaviors.

The principles to be adopted in dealing with operational risks has been summarized by the U.S department of defense as:

  • Accept risk when benefit outweighs the loss
  • Do not accept unnecessary risks
  • Plan, manage, and anticipate risks
  • Make decisions concerning risks at the right operational levels.

Operational Risk Management Educational Requirements and Training

In some instances, this area may be open to all graduates, but a Bachelor’s degree in risk management, finance, economics, statistics, engineering, and management may prove useful.

Operational Risk Management Certifications

These certifications are designed to deliver practical understanding of operation risk management framework, and are relevant to all risk related roles in organizations.

Institutions for Operational Risk Management Training

The Professional Risk Managers International Association (PRMIA) offers a certification in operational risk management, with the requirement that the candidate must be a registered member of PRMIA.

He/she must pass a single exam with a 60% pass mark, and can retake the exams if failed within 90 days, with exam fees ranging from $480 with digital handbooks, to $510 including both digital and printed handbooks.

Other institutions that offer certificates in risk management include the Glasgow Caledonian University, which offers a Master’s degree in Risk Management; the Chartered Institute of Securities and Investments, CISI, which offers advanced certificate in Operational Risks; the University of East London UEL also offers a post-graduate qualification in Risk Management.

It is advisable that you contact your local educational service providers for a list of institutions closer to your location.

Roles, Duties and Responsibilities of Operational Risk Managers

As financial institutions diversify in their practices, the role of the operational risk manager or officer continues to change.

While his duty is to develop a workable operational risk management function, he is also saddled with the responsibility to continue to create awareness and educate staff on sound operational risk management.

He also may be responsible for:

  • Manage and implement all aspects of the risk functions; which include the identification, assessment, measurement, and management of risks; the monitoring and also reporting of such risks
  • Assist in the development of processes to evaluate and predict the measure of risk a business can sustain
  • Develop risk processes and procedures and monitor critical risk issues.

Operational Risk Officer Skills

In becoming a risk officer, it is important that the following skills be adopted:

  • Sound decision making and problem-solving skills
  • An eye for details and analysis
  • Good planning and organizational skills
  • Communication and presentation skills
  • Strong capability to handle pressures
  • Being good with numbers and cost evaluation
  • Awareness of commercial activities and ability to understand business issues.

Career Opportunities in Operational Risk Management

The benefits of operational Risk management can be summarized to include:

  • Reduction in operational loss
  • Low compliance/audit costs
  • Early detection of unlawful activities
  • And a reduced exposure to further risks in the future.

And so, it is not uncommon to see operational risk managers or risk officers in institutions like insurance companies, banks and the capital market, engineering and construction, and energy and utility companies, charity and even commercial businesses, both in the private and public sectors.

Salary Expectations for Operational Risk Management Positions

Risk management is not an entry level role, and so those starting up as risk technicians are likely to earn around £21,250; risk analysts may, with years of experience earn as much as £29,00 to £44,000, while it is possible that risk managers my earn as much as £46,000 to £70,000 or more, especially at a director-level.