It's very difficult to ensure that the individuals you hire into your organization have a recognized standard of knowledge, experience, and competency. You can certify internally, but this type of program does not have much meaning outside of your organization. That's why it's necessary to look for external certification sources. And in the case of risk management, the three certifications are highly visible, recognized, and set standards that will most likely improve your organization. Let's look at how the PRM, FRM, and ERP standards look, and then discuss how those standards might impact your organization.

First, the Professional Risk Manager certification from PRMIA seems to have a high level of recognition throughout the industry. PRMIA defines its certification as the "benchmark" in global risk management. To begin with, the organization gives partial credit toward certification if you hold another designation, such as Actuarial Fellow, Actuarial Associate, or Chartered Financial Analyst (CFA), to name a few. This type of recognition means that the PRMIA puts its certification on the level of other well-known certifications. Because this type of reciprocal arrangement exists, you can be assured that the standard of excellence is high. The PRM certification carries recognition by universities, including the University of Toronto, Technical University of Munich, NYU, and also a group of faculty who represent the Sorbonne, the Ecole Polytechnique, and the Universite Paris Dauphine.

The PRM designation is used in about 80 countries, which is, according to PRMIA, more than any of the other risk management designations. This also indicates a high level of portability for the certification, which means that your organization can certainly benefit if it is international in scope or is planning expansion. The PRM certification is also endorsed by some of the best-known companies in the business, including the Canadian Securities Institute, Algorithmics, Lombard Risk, Ernst and Young and SunGard Trading and Risk Systems. These industry relationships can help your organization gain a firmer footing in the industry.

In regard to standards, the PRM stands out because of the exam format, which is designed from a database. This format ensures that a professional cannot pass the exam with weaknesses in any areas. If he or she plans to pass, he or she must be highly prepared in any area as there is no way to predict where the database will pull questions for the individual exam. The exam prep handbook is currently in use in 105 countries and is a common reference guide in 23 of the world's largest banks. Plus, the exams can be used to test knowledge areas without going to full certification. For example, you can have members of a certain department take the exams that most closely relate to their expected competencies. It's obvious that the PRM designation is well recognized for its high standards.

The FRM designation from GARP also carries high standards and recognition. GARP reports that recruiters and hiring managers are now actively looking for these certificate holders in order to fill senior risk management positions. Given the current economic climate, this is certainly a plus in the recognition column. FRM holders make up a fairly elite group, having slightly less than 18,000 members worldwide. This creates a highly recognizable standard as well as a useful network. For example, GARP reports that its 2008 candidates represented 36 industry sectors and were working in 168 of the Fortune 500 companies. A person who receives the certification can add the "FRM" to the end of his or her name, and a potential candidate can even submit a resume to see if he or she qualifies for the experience requirement.

The ERP designation carries much of the same standard and recognition as the FRM certification, including the network of worldwide certificate-holders. However, one of the more revealing elements of the ERP certification is that GARP is planning a continuing education requirement for its holders. Continuing education requirements ensure that certificate holders have current knowledge. Consider the state bar associations or even real estate and appraisal professionals in the U.S. If a person obtains a certification with a continuing education requirement, he or she is signifying a readiness to consistently work to maintain the certification and to continually uphold the standards required of the certification.

Why is recognition and standard important for your organization? Consider the value that a recognized certification brings. The certification certainly provides value for your shareholders, stakeholders, and customers. And in this financial environment, any kind of value and standard is going to be vital to the survival of the organization. Plus, a recognized standard may even bring regulatory value. In other words, regulators are looking for proof that financial organizations are actively finding ways to maintain the highest knowledge, ethics, and accountability. In relation to your leadership pool, a certification is of definite value. As you bring certified professionals in or certify your existing associates, your pool of qualified candidates grows. This pool not only possesses the competencies that are stated by the program, but also some implied competencies that come with self-guided certification programs.

Finally, certifications like these focus on the advancement of the profession and not necessarily education for education's sake. This focus ensures that your certified associates are "A" players - and that they are committed to their respective fields.

In our next discussion, we will look at the competencies that certified professionals bring to your organization, both as expressed and implied competency.