'Risk control education can become Scots forte'

SCOTLAND can lead the UK in the field of risk management education by bringing together the financial services sector and academia, a senior researcher has claimed.

Professor Alex McNeil, of Heriot-Watt University in Edinburgh, said that forging closer relationships between professionals and academics could be one of the greatest lessons of the banking crisis.

His comments came ahead of the launch of the Scottish Financial Risk Academy, the first of its kind in the UK, which has the backing of Lloyds Banking Group, Aberdeen Asset Management and risk management consultancy Barrie & Hibbert.

Directors and managers have come in for heavy criticism following the banking crisis for not properly understanding the risks associated with complex financial products.

McNeil said the academy would help staff working at all levels in the financial industry to learn more about the latest thinking on quantitative risk management.

In return, students would benefit from lectures by senior industry figures and placements within financial services firms.

He told The Scotsman: "We have a general educational programme to improve everyone's understanding of the technical side of financial risk, the measurable and modelling side of risk, which is based in mathematics.

"The companies believe that there is a general need for everybody to raise their game in their understanding of risk models and their limitations, from the technical end through a more senior level."

The academy – which received a 335,000 grant from the Scottish Funding Council – builds on Heriot-Watt's existing work with the sector, which has involved masters and doctorate students undertaking research placements within the sector.

McNeil said the sector could learn from other industries – such as chemicals or engineering – which have traditionally had closer links with Scotland's universities.

He added: "Speakers at our conferences will be internationally-known names and should draw good participation from within the industry.

"Every financial crisis is different but one would hope that putting in better educational structure would help us to avoid making the same mistakes regarding risk management.

"I think Scotland can become a recognised centre for expertise in this area. If we get in the big-name speakers then I think our events will appeal to companies throughout the UK."

As well as support from firms within the sector, the academy is being launched with the help of the actuarial profession and trade body Scottish Financial Enterprise.

Owen Kelly, chief executive of Scottish Financial Enterprise, said: "We are acutely aware of the benefits of our industry working more closely with our universities. There is a lot of work already in place." And he added: "Skills and international competition are top priorities for this industry, and our universities are extremely well placed to work with us on these agendas."