Wharton@Work

December 2017 | Finance

Risk Management: Preparing Banking Leaders for Tomorrow’s Challenges

In the ten years since the launch of the RMA/Wharton Advanced Risk Management Program, the banking industry has weathered the financial crisis, significant and shifting regulatory changes, Brexit, and more. To maintain its objective of helping risk management leaders grow their knowledge and skills over that time, the program has had to keep a step ahead of industry disruptions.

Wharton professor of international banking and program director Dick Herring, says from the beginning, Advanced Risk Management has ”anticipated industry needs. It was designed in 2007 to help risk managers transition from a specialized area of expertise to the role of chief credit risk officer.  Most banks had not yet moved to an integrated risk management model, so the goal was very forward thinking.”

But while content has changed to meet the demands of a turbulent environment, the purpose and framework of the program have remained constant. “We put together a curriculum that will help people make the change into a more senior role,” says Herring, who also directs the Wharton Financial Institutions Center. “It’s a change in terms of range of knowledge and the questions you need to ask, and also in terms of leadership perspective.”

The program is a blend of academic fundamentals — including statistics and analytic techniques, and economics and finance — and expert practitioner views. Herring says the blend is “essential, because no academic knows the details of a very complicated bank at this point, and generally even very expert bank practitioners don't have the ability to do the fundamentals that a well-trained risk manager needs to know.”Participants agree, citing the mix of academic theory and practical experience as one of the most valuable aspects of Advanced Risk Management. In fact, practitioner sessions now include many of those who previously attended the program,including  Maria Teresa Tejada, Deputy CRO of KeyCorp.

“I was invited by the RMA Wharton team to serve as an instructor on the topic of managing the risks of M&A as a result of my experience of having led a transformational acquisition.”  She adds that Key has sent many other participants to the program: “In my experience as a deputy CRO, managing risk is about managing people. As to talent, we really need to leverage the subject matter expertise of our risk professionals and invest in their success by giving them the opportunity to participate in programs like RMA Wharton.”

Because the program is held in two non-consecutive weeks, participants first meet on the Wharton campus for sessions on business acumen and leadership, and then work together on projects remotely while they are back at work. When they return to Philadelphia for the final week, they know one another well. Tejada says Key’s participating executives come back to work with “a network of industry colleagues that can serve them and our organization well.  In today's changing industry and regulatory environment there is a real opportunity for our risk leaders to think and act differently and that's catalyzed through their interactions with the global participants on the RMA Wharton program.”

“Years ago,” says Herring, “you could be a risk manager if you were simply good at judging character and could read a balance sheet. These days you have to know a lot more. There’s been a huge increase in the number of regulations, and they're often very prescriptive about how you should monitor, measure, and try to control risks,and we've had lots of developments in techniques for trying to anticipate what the future will look like. The demands on risk managers are ever-increasing both in terms of regulatory compliance and knowledge level, and Advanced Risk Management helps prepare them and the organizations for the future.”