An increasing emphasis on enterprise risk management (ERM) in the corporate world is reflected in the higher-education sector, with more courses and research exploring the concept at universities with established RM programs.
“We’ve increasingly been focusing more on ERM [in the classroom], and we’ve focused quite heavily on that area on the research side as well,” says Robert E. Hoyt, the Moore Chair and professor of risk management and insurance at the Terry College of Business at the University of Georgia.
“In risk-management education, the biggest trend in recent years has been toward ERM,” agrees David W. Sommer, the Charles E. Cheever Professor of Risk Management at the Bill Greehey School of Business at St. Mary’s University in San Antonio, Texas.
Sommer, who is also chairman of the American Risk and Insurance Association, a professional association of insurance scholars, notes that a number of institutions have introduced courses in ERM and “have adapted their curriculum to reflect a broader view of risks, including topics beyond just insurable risks.”
“There is a much broader focus on the big picture of risk management,” Sommer adds. “That’s been the biggest change in curriculum in recent years.”
Sommer observes that students are looking for an education that will get them a job when they graduate and will also position them for rapid growth in their career. “So that’s also part of the increasing ERM focus; it’s what employers want,” he adds.
RISK MANAGEMENT 101
But before students can start to undertake advanced studies in ERM, they first need a much more basic lesson—namely, what is risk management, and why does it lend itself to a satisfying career?
“Our educators face the continuing challenge that almost nobody goes to college planning to major in risk management and insurance,” says Sommer. “Students generally don’t know what risk management even means, and they have a negative impression of insurance.”
The big initial hurdle that needs to be cleared is inducing a student to enroll in an introductory class. Once that’s accomplished and students are ready to listen, a core early objective is to make students aware of the ample employment opportunities that await them, whether through career fairs, alumni visits, trips to industry conferences or other methods.
“I always feel like the risk-management area of a business school shines the most when economic times are hard, because usually when other areas are having a hard time placing their students, there still are good opportunities for risk-management insurance students,” Sommer observes.
And to prepare students for successful careers in risk management—which just as often start on the broker or carrier side of the insurance equation as they do on the corporate-buyer side—Sommer says the goal is “to give them the tools to hit the ground running, but also the foundation to build on for moving up within corporate-risk management and ERM roles.”
Risk RESEARCH TRENDS
Trends in faculty research include examining how ERM creates value in firms.
For the last 10 years, for example, Hoyt’s research focus has been on ERM, specifically addressing the question of “why a more holistic view of risk management would matter—and trying to test whether it does,” he says. “And if it does provide value, what’s the evidence and why?”
His research paper, “The Value of Enterprise Risk Management,” looks to establish a value premium using stock-market measures between companies that have introduced an ERM program vs. those that have not.
The project, begun more than five years ago, will appear in the Journal of Risk and Insurance.
“The reason my co-author and I embarked on the project was because every time I would make a presentation about ERM, people would say, ‘Yes, but we don’t really know whether it adds value,’” Hoyt explains. “Or people would say, ‘We’re trying to make the business case for whether ERM is a good idea.’ We have tried to [demonstrate] something tangible that could be used in such evaluations.”
ONLINE APPROACH TO EDUCATION
Offering higher-education opportunities online is becoming an increasingly popular option at many American universities, and the trend is starting to catch on in the risk-management sphere as well.
Kathleen McCullough, associate professor and State Farm Insurance Professor in Risk Management/Insurance with The Florida State University at the College of Business in Tallahassee, Fla., says her school’s program stands out primarily because of its online master’s degree in risk management.
“We saw that more working professionals were coming into the need for a master’s degree. There was also a desire to do more than the traditional insurance designations,” she explains.
With the advent of chief risk officers and the movement of risk-management decision-making into the executive suite, “there’s a need for these university-level credentials,” says McCullough. “We’re coming up on 10 years with the program. It’s designed for the working professional already in the field, or wanting to come into the field.”
She adds that the program “underscores a lot of what we’re seeing in terms of the changes in the industry. We’re no longer an industry where just our industry credentials are needed, because risk management and insurance is touching every facet of business now.”
Even though the school has seen increasing demand for the two-year program, she says, “We’ve been careful not to grow it too fast. We consistently have 25-30 students a year. We want to retain the academic quality.”
McCullough adds that FSU’s faculty is involved with various types of research, including the school’s catastrophic-storm risk-management center.