ARE YOU LOOKING AT A CAREER AS A FINANCE ADVISER? – FINANCE RISK MANAGER (FRM) IS THE COURSE FOR YOU!

Background

For students who are venturing into the job market and exploring professional options it is imperative that they ensure that they have periscopic view not only into the short term but also with a long term view.

CA,CS,CMA,ACMA are highly professional courses regulated by the respective Institutes and having their own rules and regulations. They all have varying degrees and levels of difficulties in successfully passing the Exams.

The numbers that clear the Exams are sometimes as low as 7 to 10 % and the Institutes believe in maintaining the entry into the professions to the bare minimum. This is mainly due to the need to keep the profile and reputation of the profession at a premium.

In view of the above, there are other options that may be considered.

Financial Risk Management (FRM) Course required quality FRM training to arm a professional with a requisite qualification, which is reasonable option with good prospects in the coming days.

Why FRM-Increasing Frauds

According to RBI Annual Report 2019-20, the amount Involved in banking frauds grew 2.5 times to Rs 1.85 lakh core in 2019-20 compared with Rs 71,500 core

In 2018-19. The number of frauds also rose 28% from 6799 cases in 2018-19 to 8707 in 2019-20.(Source-Business Today Aug 25th 2020)

In the last few years,there has been an alarmingly large number of Corporate Frauds which have been thrown up such as :

1.Satyam Computers

2.Kingfisher

3.Jet Airways

4.Bushan Steel

5.PNB

6.ILFS

7.DHFL

8.PMC Bank

9.Yes Bank

10.CCD

11.Spot Exchange of India

12.PMC Bank

13.IMA

The above statistic goes well to impress on the compelling to equip would -be professional with effective FRM online classes for Certification and that FRM is one such course.

Role and Responsibility of FRM Professional

As a true Finance Professional/Adviser/FRM there is marked emphasis on several other related aspects in the forthcoming years.

Unlike in the past where the Finance Professional/FRM was looked  merely upon as  accounting of day to day transactions,as a book keeper,the role has been enhanced  to a much higher up the value chain as a  part of Business Support/Decision Support Team.

Accordingly,the Professional also need to hone his skill sets to meet the higher expectations. FRM is one such course on offer along with efficient FRM training for interested professionals.

Further,as businesses are growing leaps and bounds, from local to global across geographical boundaries and different currencies, there is need to encompass to cover the following :

Good Governance principles have to be embedded in the organization.This would ensure that best practices and controls are established and monitored

Compliance of all statutes/legislation and other ever changing rules are adhered

Risk Mitigation measures and remedial steps are initiated to make the organization risk proof as well as ensure prevention of frauds or leakage of revenue.

Societal responsibilities are borne in mind so that CSR/Climate change matters are not overlooked.

Sustainability of business should be borne in mind to ensure that the challenges from competitors and the various other related factors are successfully addressed.

All of the above and many more expectations are almost a requirement from a Finance Professional . Unlike in the past the organization looks to him as a Key Management Personnel who would help in the decision making process.

In fact,if the Finance Professional/FRM is not sufficiently proactive or alert enough it may very well lead to the collapse of the organization.

Definition of a Finance Risk Manager

As per James Chen-Finance Risk Manager is a professional designation issued by Global Association of Risk Professionals(GARP).The GARP global accreditation is globally recognized as the premier certification for financial risk professionals dealing in financial markets.

FRMs possess special knowledge in assessing risks and typically work for major banks, insurance companies, accounting firms, regulating agencies and asset management firms. FRM coaching enables professionals to gather these skills before they step into their roles.

Role of a FRM in an E-Commerce World

The FRM has a key role to play in the success of an organization. This is increasingly felt in the current background in view of the prevalent risks in the business landscape that is going global across geographical boundaries.

In view of the current pandemic there is swing towards local markets and thereby the mantra-Think Global and Act Local.

E-Commerce is another fast developing scenario. According to a source it is valued at USD 9.09 Trillion

Pandemic and Post Pandemic Risk

Last one year due to Global Pandemic many new risks have surfaced and there is a need to evaluate and take preventive steps for minimizing or avoiding the same.

For instance, there is Work from Home (WFH) mandate for most IT companies.

There is a threat perceived as the firewalls at homes may not provide complete failsafe security in the home environment.

Further, the data taken out of the secured office environment or accessed from home may be misused.

WFM may also expose risks wherever there is strong inclination for interfacing with various functions in an organization which may not happen as in a normal situation.

Internal Risks/External Risks

For a FRM risks may be classified as Internal Risks and External Risks.

The Internal Risks are those that emanate from within the Organization.

They may be enumerated as Employee Risks, Process Risks, Operations Risk, Documentation Risk, etc.

External Risk would include Political Risk, Credit Risk, Vendor Risk, Environment Risk, Obsolescence Risk etc.

The above are merely some instances and not exhaustive.

Risk Matrix as a tool for a FRM

A prudent FRM would do well to list out all the Risk perceived in an organization in a matrix table, which are part of FRM coaching. In X axis, the variety of Risks may be mapped out, while the y axis would reflect the severity of the risks-mild,high,very high etc.

This would help in focusing on the same as well as suggesting ways and means to mitigate the same.

Obviously,this exercise would require the support of the management without which it would be virtually impossible to succeed.

Conclusion

“Some risks that are thought to be unknown are not unknown.With some foresight and critical thought,some risks that at first glance may seem unforeseen,can in fact be forseen. Armed with the right set of tools,procedures,knowledge and insight,light can be shed on variables that lead to risk, allowing us to manage them”. By Daniel Wagner.

As expounded above,FRM Certification would certainly equip a Finance Professional in the battle against various risks and come out successful.

Author : G.SRIKUMAR,FCA. INDEPENDENT DIRECTOR

Author Bio

Qualification: CA in Practice
Company: https://www.mylogicvideos.com/
Location: Bangalore, Karnataka, IN
Member Since: 01 Jul 2020 | Total Posts: 12
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