Training in bank risk management: a perennial issue with new implications
Executive Education / 25 April 2023
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Senior Programm Manager
Ulf Mayer ist seit Anfang 2023 Senior Programm Manager in der Executive Education der Frankfurt School und mit seinem Team für die Themen Risikomanagement, Compliance und Audit verantwortlich. Er ist seit über 20 Jahren als Bildungsmanager in der beruflichen Weiterbildung rund um Finanz- und Kapitalmärkte tätig, u.a. bei der Deutschen Börse und der Deutschen Vereinigung für Finanzanalyse und Asset Manager (DVFA). Neben dem Studium der Politikwissenschaften und Volkswirtschaftslehre hat er 2013 das Berufsdiplom CIIA – Certified International Investment Analyse der ACIIA abgelegt.

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The 2008 global financial crisis ushered in a new era of risk management for banks and savings banks. To minimise the risk that banks would fail, numerous regulations were introduced. In response, banks significantly expanded the relevant in-house departments – in the ten years since the financial crisis, the number of German bank employees working in risk management has almost doubled.

Staff training has also played an important role here, not least to ensure that this growth remains qualitatively sustainable. Improved training and education have helped to strengthen the risk culture and risk awareness in financial institutions generally.

As part of the same initiative, the years following the financial crisis saw the emergence of numerous in-service training programmes focused on bank risk management. The challenge here was not just to provide experienced bank staff with the necessary risk management expertise, but also to give staff with a mathematical or scientific background and excellent methodological qualifications a clearer understanding of how banks actually work and how different risk factors interact.

Overall, training bank staff in risk management has helped to improve the stability and security of the banking system by improving banks’ ability to identify, assess and manage risk exposures. Even so, recent developments in spring 2023 involving regional banks in the USA as well as Crédit Suisse have once again highlighted the ongoing importance of professional risk management.

Banks have completed the risk management expansion phase

The large-scale build-up of staff in risk-related departments has now finished. Teams have reached an appropriate size, and as well as professional training, have acquired extensive practical experience. This means that the onboarding of new recruits now has other implications – no longer must managers worry about building up staff capacity as quickly as possible, but rather about how best to handle the usual staff turnover. Today, thanks to the wealth of departmental experience and adequate resources, a proportion of the required training can now take place on the job. This is changing the specifications profile for the relevant training programmes.

Consequently, Frankfurt School of Finance & Management has completely revised its professional certification courses in traditional bank risk management over the past 12 months. The university has merged four previously self-contained courses focusing on such areas as credit risk, liquidity risk and market price risk to form a single, general, executive education course in risk management: Frankfurt School Risk Manager. To supplement this course, participants are given the option of booking three expert modules, each focusing on one of the above-mentioned specialist areas. Consequently, the business school’s conventional risk management courses are more focused and compact than before.

New challenges: ESG as risk factor

While traditional bank risk management as a whole has clearly become much more professional over the past decade, there are still many challenges to overcome. Thus the wealth of experience accumulated to date is based on an extended period characterised by zero or even negative interest rates. As a result, the concept of zero-risk interest continues to exert considerable influence on many risk models.

This is further exacerbated by the changing risk landscape. ESG (Environmental, Social and Governance) risk factors in particular represent a wholly new challenge. And operational risk – not just limited to cyber risks – is becoming increasingly important as an existential consideration.

The starting point here is not dissimilar to the period following the financial crisis: regulation continues to metastasize, while well-qualified specialists in these areas are still scarce.

In response, Frankfurt School of Finance & Management has adjusted its courses to meet the new challenges. First, the whole issue of sustainability risk management has been incorporated as a new module in the Risk Manager – Non-Financial Risks certification course. Second, the focus on IT Risks and Third-Party Exposure has been enhanced. A partnership with the German Society of Operational Risk Management now gives course participants the chance to take part in three leading-edge specialist conferences covering operational risks, ESG risks, and the application of quantitative methods to non-financial risk management, adding active dialogue with a large group of practitioners to the specialist knowledge transfer that already characterises executive education courses.

Qualifying with a Frankfurt School certificate

Completing a certification course involves more than just acquiring up-to-date specialist knowledge – after successfully passing the exam, graduates are awarded a corresponding certificate by Frankfurt School of Finance & Management. Once qualified, graduates can demonstrate their level of expertise by presenting the relevant documentation, awarded by one of Europe’s leading business schools.