UK
GUEST COMMENT: Banks are hiring in risk, but recruitment’s not enough
8 September 2008
Never has the cost of lax risk control been more stark. From $7.1bn of losses at SocGen to huge writedowns at the likes of UBS and Merrill Lynch, banks have learnt the hard way what it means not to keep a firm grip on their employees and businesses.
As a result, we are seeing strong growth in compliance roles with a ‘monitoring’ element to them, for example trade survelliance and monitoring and risk assessment and monitoring.
But is it simply enough to plug in people with the requisite systems skills, product knowledge, regulatory rule book knowledge? Are there still endemic problems of corporate structure, governance, bureaucracy, silo’s, culture etc? And as such, are these appointments really there to do little more than pay lip service to the notion of tighter risk controls.
Image has been replaced by reality. UBS had a strong image for risk control, but that image has proven little more than a mirage.
At the same time, a large number of dissatisfied compliance and risk management professionals are emerging. Making change happen is a tough thing in large organisations, and as a consequence a lot of the talent is moving to smaller organisations where they feel they can genuinely make a difference.
Many institutions are behind the curve. Most of these control functions should not be viewed as a one time project, but as a changing and ever-evolving discipline that develops with the dynamics of a changing risk landscape.
Unquestionably risks faced by institutions are more and more complicated - be it financial markets risk, credit risk, people risk, reputational risk, etc. etc. Too many institutions still have a fragmented approach to risk management, with too many silo’s and with too little responsibility. The convergence of a number of control functions into more holistic / helicopter view of risk evaluation still has to happen.
In the meantime, we still have a ‘tick & bash’ control environment. So much for principles based regulation designed to “stimulate innovation and flexibility”.
Gavin Bonnet is executive director, head of EMEA business management & controls at Correlate Search, formerly known as Akamai Financial Markets.
If Risk is to be successful then it needs to be a more independant division with regards to accountability and it needs to become more prestigious internally. Risk folks at banks nowadays are simply in the pockets of those in the fornt office so they are constantly watching their backs and trying not to get on the wrong side of the front office for fear of their jobs or progression of their jobs. The risk department should have the ability to get those in the front office shakin in their boots rather than vice versa. Additionally, the risk department needs to attract good calibre people to improve their own perception from others in the firm. They should have a pay scale on par with front office lines. I wouldnt mind considering going into risk but I dont have a maths degree, I dont have VBA or C++, I dont have any Risk experience and I have not been involved with VAR or stress testing. However, I do work in derivatives, have previous front office experience and have an excellent academic background. Are there are risk jobs out there willing to take on a new candidate with no relevant experience, no coding ability but product knowledge, on a base of over £85K. I think not.
Risky 08 Sep 2008
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