eFinancialCareers

Banks have been under-investing in their IT risk management solutions and are tipped to splurge in the next year.

Jérôme Kerviel’s antics thrust the fragility of Société Générale’s operational risk management system into the spotlight, and a report by Ernst & Young suggests many banks aren’t doing much better.

Bill Barrett, head of E&Y’s technology and information practice, reckons geographical expansion has lead to a series of disparate systems: “Looking across a large institution, they have multiple IT organisations supporting different lines of business. There is no common understanding of risks. Where there are common processes and services, you would expect that risks would be similar.”

The survey suggests that nearly 80% of the 145 firms surveyed are set to up investment by between 5% and 25%+ over the next 12-18 months.

Ben Elmslie, IT security and risk consultant on the IT banking team at recruiters Huxley Associates, says there’s been mixed demand for operational risk specialists: “We’ve seen a big increase in the numbers required in the information risk space, but demand for IT auditing experts has remained constant.”

And while it’s true to say that a lot of projects surrounding operational risk are in the pipeline, this has yet to manifest itself as buckets of jobs, reckons Andrew Keene, director of investment banking IT recruiters Thomson Keene Associates.

“A lot of those plans are medium to long term rather than short term. Most of the banks are looking at their cost base and looking to scale IT projects back rather than scale them up.”

But Elmsie reckons there are two approaches to recruitment: “Some banks have set about taking on very senior people to look at defining risk frameworks and strategies utilising existing resources, while others are looking at investing heavily into human capital.”

Senior roles haul in £85k-£115k, reckons Elmsie, with bonuses coming in at multiples of salary. Project management roles in this sector can bring in £55k-£70k.

But Jeremy Ward, director of IT consultancy Excelian, says banks are more concerned with liquidity risk than refining systems against any potential fraudsters.

“Most banks are not necessarily worried about the Jérôme Kerviels of this world. They are more concerned about the fact that they’ve got a lot of stuff on their books that isn’t worth much and they don’t want to take it as collateral, because they’ve got no idea of working out how liquid it is,” he explains.