This is the dawning of the age of RMA-Credit Risk Certification

Astrologers are still quibbling over whether the Age of Aquarius began in 1997, in 2000, or won't happen until 2100. Baby boomers know it's been dawning since at least 1968. By contrast, a new age in credit risk management dawned two years ago and is now fulfilling its promise. Systems are checked, processes are in place, and RMA is on target for the first applicants to the R31A-Credit Risk Certification program to prove they have the right stuff to be RMA-Credit Risk Certified, which they will do beginning March 1.

How do I apply?

If you have at least three years of commercial credit risk experience and want to take the exam, you are eligible to apply to take the exam: the application can be found on RMA's Web site. (1) Upon acceptance, you will receive access to RMA's Body of Knowledge (see explanation later in this article) and the Web-accessible practice exam. You also will receive your authorization-to-test letter.

When is the exam?

The RMA-CRC exam is offered in two testing windows each year. The spring exam will be offered in 2005 from March 1 through April 29: the fall exam will be offered from October 3 through November 30. Applications for the spring exam are being accepted from November 1 to January 5: applications for the Fall 2005 exam will be accepted beginning June I and through August 1.

How much does it cost?

The cost for individuals from RMA member institutions as well as professional associates is $495: the cost for nonmembers is $695.

How do I take the exam?

The computer-based exam is delivered on-site at more than 200 Pearson-VUE testing centers in the U.S. as well as 115 centers in Canada. Detailed instructions are included in the authorization-to-test letter.

What about people with disabilities?

RMA and VUE offer Americans with Disabilities Act and Employment Equit'y Act (Canada) accommodations. When enrolling, be sure to complete and submit the special accommodations form.

What's on the exam?

The exam is based on seven dimensions:

1. Evaluating a client's industry, markets, and competitors.

2. Assessing a client's management ability.

3. Completing accurate, ongoing, and timely client financial assessments.

4. Assessing the strength and quality of client/sponsor cash flow.

5. Evaluating collateral values, including collateral inspections.

6. Identifying repayment sources, understanding loan structure, and documenting credit exposures.

7. Knowing how to spot problem loan awareness and actions to be taken.

What is the exam format?

The exam is composed of multiple choice questions in three styles:

1. Stand-alone questions. The question itself contains all the information necessary to provide the answer.

2. Short scenarios. A brief two- to three-paragraph story is presented, along with two to three related questions.

3. Long scenarios. A story of five to six paragraphs is presented, as well as financial statements, a balance sheet, income statements, and a cash flow statement, along with five to eight questions related to the material provided.

Can you give a couple of examples?

Here are two sample questions. (Answers are given at the end of the article.)

Sample question #1: Identify the loan structure that is not matched appropriately with its purpose and source of repayment?

Sample question #2: A construction company with growing revenues uses the percentage-of-completion method of accounting. A review of the most recent annual financial statement shows that costs in excess of billings are lower than in the prior year and billings are in excess of costs increased. Given this information, which of the following is the most likely conclusion from this information?

A. The company is relying more heavily on short-term borrowings to fund its increasing contracts in progress.

B. The company is obtaining more support from its customers to fund its contracts in progress.

C. The company is generating more unbilled costs as contract revenues grow.

D. The company is billing its customers less frequently than in prior years.

What study/preparatory materials does RMA offer?

Web-based practice exam. The candidate may take a Web-based RMA-CRC practice exam. This exam models the actual test examination questions and is scored. Recommended remediation is provided where necessary.

Body of Knowledge. RMA recommends that you review its Body of Knowledge (BOK). This document contains the minimum material a sufficiently skilled candidate is expected to know to successfully pass the examination. It outlines the exam blueprint including the seven dimensions.

Credit dictionary. RMA's Credit Lending Glossary is available for the RMA-Credit Risk Certified examination. The definitions, as presented in the glossary, are what you should use as guidelines in answering the test questions.

Web-delivered review sessions. RMA offers RMA-CRC review sessions. All sessions are Web-delivered using Microsoft's Live Meeting. Each session is 90 minutes and covers one of the dimensions. There is one additional session that explores test-taking strategies and the testing experience.

What are the after-exam requirements? The successful certification recipient must stay current in the credit risk field and maintain either a standard RMA membership or a membership at the new certificate membership level. This is the best way to assure customers and employers that the RMA-Credit Risk Certified individual maintains the commitment to excellence begun with the certification examination.

RMA requires 60 continuing education credits every three years, beginning with the year of certification and every three years thereafter. RMA will conduct random audits. Recertification forms must be submitted by the end of the third calendar year following successful completion of the RMA-Credit Risk Certified exam.

The age of RMA-Credit Risk Certification has arrived. As Derk Lovell, VP and chief training manager for Zions Bank, said in "Excellence Begins at RMA" (October 2004). "The 'bar' is now raised. Those seeking employment in the credit/lending world will seek certification in order to qualify for available positions." The next step is yours.

    Purpose            Loan Structure           Source of
                                                Repayment

A   Working capital    1 -year line of credit   Asset conversion
    financing

B   Capital            5-year term loan         Operating profits
    expenditures

C   Recapitalization   7-year term loan         Operating profits

D   Acquisition        ABL revolver             Asset conversion

Answers to Sample Questions

Sample question #1: D. Acquisition/ABL revolver/Asset conversion

Sample question #2: B. The company is obtaining more support from its customers to fund its contracts in progress.

(1) Visit www.rmahq.org and click on the link to the RMA Certification page to download the application. Follow directions for sending the application to Sylwia Czajkowska, RMA Certification Specialist, by mail or fax. For more information about the exam, visit www.rmahq.org, call Sylwia Czajkowska at 215-446-4017, or send an e-mail to sczajkowska@rmahq.org.

COPYRIGHT 2004 The Risk Management Association
COPYRIGHT 2005 Gale Group