Working in Risk: the skills required for a rapidly developing profession LEO - The financial center's mag

Although in the past, risk management focused primarily on Banking, it has recently become a crucial component of the Investment fund industry. Following changes in the UCITS Directive, the alternative investment managers directive (AIFMD) and numerous CSSF circulars, players in the investment fund industry are now required to manage risk professionally on the same level as banks.

“Risk management is not there to control, but rather it is a real component of the business and an added value. It runs through the whole chain of the business, from those who are working on products, right up to those who are taking the strategic decisions,” says Dr Luc Neuberg, CEO of BCEE Asset Management. “It is vastly different to when I started my career as a risk analyst, and I was playing with mathematical models. Now we are managing with regulations, interpretation flows and more with the core business and this is a tremendous evolution.”

AN EFFECTIVE RISK MANAGER IN TODAY´S WORLD

“The risk manager of today needs to have substantial experience and a global view on the whole business. It is less and less technical and more linked with governance."

"The most challenging risk management developments are multidisciplinarity, for example cyber risk and the operational risk linked with outsourcing. We need to cover so many different things, and that was not the case in the past. We are also facing more and more regulatory constraints, so the challenge is how to comply with all those regulations and to manage priorities.”

DR LUC NEUBERG, CEO, BCEE ASSET MANAGEMENT, CHAIRMAN ALRiM

The Luxembourg regulator, the CSSF, and the risk management industry are in close contact regarding new regulations. The CSSF sets up technical committees, with practitioners to discuss new regulations to ensure that industry practice is fully aligned with the latest regulations and that the latter are efficiently implemented.

“We receive frequently new texts from the regulator, with useful information and insights, which is not the necessary the case in every European country. If I have a question, I can directly contact the person responsible for risk for the funds industry or the person responsible for the risk on the banking side and this helps us to iron out any issues.”

PROFESSIONAL STANDARDS FOR RISK MANAGEMENT

Neuberg, is Chairman of ALRiM: the Luxembourg Association for Risk Management, which supports the development of risk management in the Grand Duchy. The association, in partnership with the House of Training (HoT, former IFBL), has developed a complete training programme in risk management covering a wide variety of topics.

“Educating risk managers is a huge challenge because we need to provide some extremely sophisticated technical courses and on the other hand we need some courses where we offer the big picture, a global view. Continuous training in risk management is also necessary at every level, even at the board level,” adds Neuberg.

BOARD-LEVEL RISK MANAGEMENT

“When you drive a strategy, you need to be aware of the risks. Take the risk management weakness related to the subprime crisis, when a lot of board members were totally ignoring the level of risk which they had on some products. Is that acceptable? Can you be in a car and ignore the speed at which you are at? No, so you need some technicity at the highest level, otherwise it is like you are playing with a bomb without knowing when it will explode.”

LUXEMBOURG SCHOOL OF FINANCE TO LAUNCH MASTER IN RISK MANAGEMENT

PROFESSOR JANG SCHILTZ, HEAD OF LSF

The most popular training offered in Luxembourg, is The Risk Management specialist certificate, focusing on banking or the investment funds industry. The 11 day training, covers Measuring and Managing Market, Counterparty, and Operational Risk, as well as asset and liability management. ALRiM is also supporting the Luxembourg School of Finance (LSF) with the development of a new MA programme in Risk Management.

“The programme will be offered with an opportunity to specialise in funds, banking or insurance, mixing academic excellence with professional practical experience,” explains Professor Jang Schiltz, Head of LSF. “The price for our Masters programmes is currently 17,500 EUR, which by international standards is very competitive. The general pedagogical philosophy at LSF is to teach small groups, hence we would anticipate a first intake of around 35 students, who will the have the opportunity of undertaking an internship in the Luxembourg financial centre.”

Credits:

Mike Zenari

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