Houston, Texas, United States
Job at time of interview: Director, Credit Operations, Shell Trading
I think it has become more collaborative over the last 10 to 15 years. Initially, I saw specific risk functions working independently and in silos--there never seemed to be an overarching view of total risk management in an organization. Going forward, I see a more focused effort in making risk management a standard business practice in any company. Many times we see unfortunate events experienced by trading organizations and a lot of times it resulted in poor risk management behavior or advice not adhered to by the commercial organization.
I have witnessed a transition of the credit risk management function from more of a back-office collections effort to a forward-thinking, upfront risk mitigation effort with our commercial and sales teams. The use of prudent underwriting methods and the establishment of contractual credit terms in commodity trading contracts have grown more common over the last 10 to 15 years, as has advanced credit portfolio analysis, both pre-deal and post-deal. Bringing an external focus and commercial mindset to the office everyday can help give a sharp focus to the credit team. As we enable new and existing business with our customers, we can stay focused on ultimately protecting that value and collecting those dollars at the end of the day.
Working in the energy industry with my prior employers taught me that no company is invincible--companies can and will go bankrupt, merge, divest, or acquire each other. Having gone through that personally is a very humbling experience. In business, it helps to point out to others that potential risks are out there with a particular transaction or company and it is prudent to think about, discuss, and put measures in place to protect shareholder value.
Today, more than any other time, it seems that all risks are being discussed. I think companies should take a holistic view of the enterprise risk management function. Operational risk is a big one that until recently didn't get much attention. Whether it is a tragic event offshore or an error in an Excel model, both can lead to unexpected consequences. Regulatory and compliance risks are also on the forefront of the energy industry's mind. Not abiding by certain rules can mean you are placing your license to operate at risk.
I try to instill in my team and those in my department an awareness of what is happening around them in the marketplace. Staying abreast of news and events has an impact on the opportunities and risks Shell has to manage on a day-to-day basis. Not every deal or transaction is the right one to make, but if you follow a disciplined approach in balancing risk and reward, you can be successful both at a professional and personal level.
I think the ERP program exposes you to all types of risks to be aware of in your organization. Even though you may work in a specific risk function, like credit, the ERP program helps you think about how different risks affect an organization and how many of them are connected. Definitely take the time to study and reread the materials that you may not be as familiar with, and continue to take those practice tests.
The ERP designation brings with it a certain understanding and rigor placed on enterprise risk management with numerous stakeholders, both internal and external. Earning the ERP also opens a network of professionals who you can reach out to and share and discuss ideas. Other ERP holders may have certain knowledge or experiences that can complement yours, and by doing so, can bring more recognition to the ERP program.
Risk management is more than just a class. Students should definitely learn from their mistakes, using good judgment and their experiences to avoid making the same mistakes in the future. History has a way of repeating itself. I don't think it is because of a lack of knowledge, but instilling sound judgment and sticking to your principles under work pressures is something we can all show improvement with.
I think most graduates have good technical knowledge, but the need to build your professional network inside and outside your company is even more important in today's business environment. Building professional relationships helps in working on projects.
While I enjoyed my time at university, I think I would have spent more time talking to more people already in the field of study I was entering.
Energy risk management will never be boring. Government and economic policies are written and driven by energy resources--how people obtain them, generate them, use them, and conserve them. The energy industry is always changing. Energy risk management is a great field to be in, and it can have an immediate impact on how we live our lives.
A global risk manager must have a good understanding of how multiple businesses around the world can complement each other, and be able to communicate risks in those businesses. Being in a global organization requires strong teams to support the local businesses but also work together to report on those risks using global risk management tools and solutions. Sharing knowledge and experience can strengthen risk management for your organization.
I think it is important to have multiple mentors. You can always learn something from somebody, even in a different field or industry. Risk management is not just an energy focus but is relevant in all industries.