PHILADELPHIA, Nov. 1, 2006 (PRIMEZONE) -- Regulation is more complex both within and across countries. Technology has been both the salvation and curse, making it possible to coordinate complex activities around the globe, while also becoming a major source of vulnerability. To address these issues, the Wharton School and the Risk Management Association (RMA) are launching The Advanced Risk Management Program, an executive education program focused on managing banking risks, to be offered in February 2007
Bank executives face many new risks in a world of globalization, changing regulations and new technologies, but also have access to new tools for more effective risk management.
"The technology to help you measure and manage risk has increased in sophistication markedly since the late 1970s," said Professor Richard Herring, Jacob Safra Professor of International Banking at Wharton and academic director of The Advanced Risk Management Program. "Financial technology has kept pace with the growth of information technology so that managers have an ever-growing array of options to slice, dice and redistribute risk. These tools enable managers to measure, manage and control their risks with much greater precision, but if they are not properly used they can inflict a lot of harm."
Well-managed banks have good methodologies for identifying, measuring and managing risks. They have processes for learning from their past experiences, such as analyzing data on the outcomes of loans. "A well-managed bank has a crystal clear idea of the cost of equity capital and how much shareholders are demanding that they earn," Herring said.
Banks already have seen the impact of new tools to improve the management of financial risks. "All of the increase in resources devoted to managing risks has led to better outcomes in the banking industry," Herring said. "Banks have done a much better job of handling the risks. The key evidence is the fact that when we experienced a stock market crash and a recession at the turn of millennium, bank profits held up very well." Despite the bursting of the tech bubble and the significant decline in share values, banks were better capitalized, had lower losses and better profitability.
But some banks still need to increase their sophistication in addressing risks, particularly in the light of changing regulations. "For some banks, it will require a remarkable transformation in the rigor with which they measure and manage risks," Herring said. "It is a huge training challenge as banks get up to speed. There has been an increase in demand for people who understand these issues."
To provide this education, the Wharton School joined with the Risk Management Association to establish a new program for banking executives. While there are many, sharply focused programs aimed at the "rocket scientists" who build models of risks, there is little education to prepare managers to understand and manage risks at a broader level. The new Advanced Risk Management Program offers an understanding of both the power of new tools and approaches as well as the changing regulatory environment. The program combines insights from research and practice. "This is an area where the gap between theory and practice is narrow," Herring said.
The Advanced Risk Management Program, the first executive education program to offer a comprehensive treatment of risk management, is designed for leaders with proven experience in the financial services industry. The program will be held in two sessions of 10 continuous days each to minimize time away from work, family, and friends. The first session will begin in February 2007. Class size will be limited.
About RMA
Founded in 1914, The Risk Management Association is a not-for-profit, member-driven professional association whose sole purpose is to advance the use of sound risk principles in the financial services industry. RMA promotes an enterprise approach to risk management that focuses on credit risk, market risk, and operational risk.
Headquartered in Philadelphia, Pa., RMA has 3,000 institutional members that include banks of all sizes as well as nonbank financial institutions. They are represented in the Association by 17,000 risk management professionals who are chapter members in financial centers throughout North America, Europe, and Asia/Pacific. Visit RMA on the Web at www.rmahq.org.
About the Wharton School
The Wharton School of the University of Pennsylvania-founded in 1881 as the first collegiate business school-is recognized globally for intellectual leadership and ongoing innovation across every major discipline of business education. The most comprehensive source of business knowledge in the world, Wharton bridges research and practice through its broad engagement with the global business community. The school has more than 4600 undergraduate, MBA, executive MBA, and doctoral students; and an alumni network of more than 81,000 graduates.
Each year, Wharton Executive Education works with more than 8,000 business leaders on its campus in Philadelphia, at Wharton West in San Francisco, and at sites around the world. The Wharton Learning Continuum is Wharton Executive Education's model for delivering Impact Through Education(tm) --supporting companies and individuals in a 9- to 12-month learning process that is designed collaboratively with clients, delivered by Wharton faculty, and monitored to produce specific outcomes.
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Program Contact:
RMA
Mark Zmieweski, Director of Strategic Learning and Research
+1 215.446.4085
mzmieweski@rmahq.org