CERAs are trained to be experts in Enterprise Risk Management (ERM), adding value to businesses in the traditional actuarial fields and in the newer, wider fields.
But what does that mean?
Below is a sample of what CERAs know about ERM and what they can do for you.
Learning/Skills Goals – 1
A CERA-holder will have a thorough understanding of:
- the concept of ERM
- the drivers behind ERM – governance, regulation, improvements in understanding of risk and techniques for measuring and managing risk, enterprise value protection and creation etc
- practical aspects of ERM, including all elements of a robust risk management framework and its operation, and critical success factors
- standards and good practice in use around the world
- the different types of risk – financial, insurance, operational, and strategic
- the quantification of risk, including tools and techniques and supporting mathematics
- practices and techniques for the management of risk, including control, mitigation, transfer, avoidance, and exploitation of risk opportunities
- the economic value added by sound ERM
- important regulation and regulatory capital requirements.
Learning/Skills Goals – 2
For the risks that can currently be modelled effectively, a CERA-holder should be proficient at the following tasks:
- independently develop reasonable models to quantify risk by type & in aggregate
- parameterise the models appropriately
- understand when historical data is applicable
- know when and how to apply current values
- be able to apply informed judgment
- run the models to obtain relevant results
- be able to focus on the key metrics
- select appropriate number of iterations
- be able to update the model as necessary
- explain the models and the results to a variety of audiences, other technical ERM experts, managers of specific types of risk, individuals such as the CFO, CEO and board members.
Learning/Skills Goals – 3
In addition, a global CERA-holder should be able to do the following:
- implement the basic steps in the risk management process for any individual type of risk and in aggregate
- recognise how corporate governance issues can affect risk management within an organisation, including organisation structure and remuneration incentives to accept or control risk
- use the standard methods for reporting risk to boards and senior management
- calculate regulatory capital requirements for insurers and banks
- understand how rating agencies incorporate risk management in determining ratings
- implement and explain economic capital models within an organisation.