ERM education in Asia is too narrow, leaving risk managers ‘still grappling with even the most fundamental issues’, according to a professor at one of the region’s leading business schools.
Holistic risk education and more critical thinking is needed to improve the education standards of Asia’s risk managers, according to Nanyang Business School’s Professor Low Buen Sin.
Speaking with StrategicRISK, Professor Low, Associate Dean, executive programmes and external relations at the Singapore-based institution, says that enterprise risk management (ERM) education in Asia finds itself in a “silo”.
“By ‘silo’, I mean industries are focused on ERM issues confined only to their domains [area of focus],” he says.
“We have accountants and auditors looking at the financial reporting risk, while the financial sector will view risk from the perspective of capital adequacy, bank regulation and compliance.”
Holistic approach needed
Professor Low says rather than ERM being intrinsically tied to companies’ specific industries, ERM should be more general and the underlying thrust of a company. This can be achieved through a more holistic approach to ERM education.
“Some risk managers are still grappling with even the most fundamental issues — aspects like risk appetite and how to embed risk oversight into strategic planning. So we need to work on these areas as it is a real challenge.”
One notable gap in risk education is the lack of higher education degrees which specifically cover ERM and are tailored for those seeking a career as a risk manager.
“In Singapore, there is not an undergraduate course for people hoping to be a risk manager. There is a gap there and we are certainly looking into it,” says Professor Low.
Currently, Professor Low says Nanyang Business School’s Bachelor of Accountancy does expose its students to ERM concepts and frameworks, alongside corporate governance issues.
“So they [accountancy students] do have some structured training and a lot of them will take an interest and assume a role in ERM. That is why you see accountants become risk managers.”
Nanyang Business School runs its own intensive four-day ERM programme, aimed at middle to senior executives from all backgrounds.
“We look to deliver a holistic programme that will cover all aspects of ERM so that participants will appreciate risk from different perspectives and understand how they are intertwined,” he says.
“We are targeting a very wide audience, such as senior management not working directly in risk management who want to know more about ERM and protect their organisations, alongside practicing risk professionals who want to know more about the emerging risks.”
Looking at risk ‘critically’
Nanyang Business School’s Enterprise Risk Management programme looks to analyse defined skill sets in ERM and then critically examine them.
“There are a number of skill sets applicable to risk managers, such as risk identification and risk assessment, but our programme extends beyond that to get participants to develop critical thinking,” Professor Low says.
“On the course we ask questions of ‘whys?’ and look at how things can be done better. Participants take an active role in the discussions. We hope they will walk away with a very good grasp of the risk management concepts.”
In terms of the overall future of ERM education in Asia, Professor Low says it will be “very crucial to all organisations”, as firms have to grasp ERM properly to be successful.
“Currently the push [towards ERM] comes mainly from the compliance side. However, as more organisations see ERM in its true light, they will begin to integrate ERM,” he adds.
The “true light” of ERM which Professor Low mentions is moving beyond seeing it as a mere cost function or compliance issue, and realising that companies can actually increase their overall value by investing in ERM.