Its failure played a huge part in the worldwide recession but now – just over five years since the crises first broke – financial institutions across the globe are only just waking up to the pivotal function that risk management must play in their operations, and they are ramping up headcounts in this area accordingly.
The latest Morgan McKinley Risk Global Trend Report shows that awareness of the importance of good risk management is continuing to rise among decision makers within the industry, due largely to high profile failures, the threat of financial crime and the economic uncertainties of the recession years. As a result, recruitment budgets in risk management are increasing across the globe, and with a shortage of talent affecting many countries, competition is becoming international.
These results echo the latest Ernst & Young banking risk management survey, which sees a renewed focus on risk culture, with board risk committees becoming almost universal. The report also shows that the seniority and stature of chief risk officers have increased hugely since the crises – with 81% now reporting directly to the CEO of the company.
For the risk sector as a whole, it’s led to a mixture of opportunities and challenges, particularly in the UK, where the scale of new recruitment has been extensive. Hiring has been particularly buoyant amongst the Big Four accountancy firms, which are adding hundreds of new risk-related roles. And with the challenge of a talent shortage hitting many businesses at middle and assistant manager level, this is forcing many of them to look abroad to recruit, particularly towards mainland Europe and Australia. In terms of specific roles that are high in demand, recruitment is currently focused on operational, credit, investment, financial and market risk, with conduct risk an emerging area.
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The war for talent, however, is not limited to the British Isles, but is also high on the agenda in the growing economies – even in China, despite it being largely untouched by the recession. This is a trend which has been noted by Rio Goh, who heads up Morgan McKinley’s China headquarters in Shanghai. “In China there is a mood of growing economic confidence but this is coupled with a financial uncertainty and a general increase in risk awareness, all of which are contributing to a more buoyant recruitment market. However, as there is a shortage of local talent, this may require organisations to look to other APAC locations and Chinese nationals currently working abroad to fill the void.”
Nick Lambe, Managing Director of Morgan McKinley’s Hong Kong operation, believes that risk management will play an important role in the country’s future, due to a combination of the economic upturn and the “fear factor” of past failures. “Risk management professionals will play a pivotal role in 2014 and beyond, not only because regulations will evolve but also because institutions are gaining a better understanding of the business value of the function,” says Lambe.
So what does this mean for the career prospects of individuals with risk management expertise? This global trend makes for exciting yet changing times ahead for risk professionals. Clearly, as awareness of the importance of the role has risen, so has the demand for top talent in these areas. Opportunities are on the rise, as are salaries in many countries. Our report predicts that in the UK, for example, successful candidates can expect a 20% pay increase if they decide to move from their existing position.
However, for up-and-coming risk management professionals, the change will amount to more than simply an increase in bank balance. It is also a chance to work in a now hugely important area of banking – and as the profile of risk management continues to rise, employees are getting more opportunities to liaise with the most powerful individuals in the finance world. Moreover, these opportunities are not limited to their own sector – professionals are now gaining experience of more diverse areas of banking and even junior employees are getting exposure to senior stakeholders. As a result, roles are likely to become more challenging as many stakeholders – particularly those in front office roles who naturally come from a sales-driven culture – are not used to dealing with risk managers.
What skills do risk professionals need to take full advantage of this dynamic jobs market? Although companies are upping their investment into new talent, hiring processes tend to be lengthy, as they try to find candidates who tick all the boxes. Individuals looking to move to pastures new need to be aware of current trends and gain relevant experience of new regulations as well as showing that they can adapt their skill set in today’s fast-changing environment. And now, more than ever, candidates must ensure that they back up their CVs by preparing intensely for interviews.
In terms of technical skills needed, knowledge of ICAAP, ILAA and Basel III are highly valued by banking organisations, and a proven ability in statistical analysis is a vital asset alongside certification in Risk Management or FRM and accounting qualifications. Companies are particularly on the lookout for candidates with a Master’s degree in Financial Mathematics and Engineering. Individuals with international experience are also hugely in demand, as organisations increasingly look overseas to fill shortages. Now that risk management professionals are expected to liaise with other disciplines within the business, effective communications skills are also highly sought after.
Working within risk management has never been an easy career option, and as businesses continue to learn from the mistakes of the recession, the list of responsibilities and challenges for professionals in the discipline is growing by the year. However, for financial services professionals who wish to work in the cutting edge part of the industry – in a role that offers both international opportunities and a chance to work with the most senior executives – the job is increasingly becoming an enticing prospect.
By Jon Carey: Associate Director at recruitment firm Morgan McKinley