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18 Nov

Risk Management Review 2019

What has been happening in Risk Management this year? As a specialist in risk recruitment for the financial services, I have good visibility of market movements and trends. Here are my market views and observations.

Regulatory Projects

The Fundamental Review of the Trading Book (FRTB), Basel III and Markets in Financial Instruments Directive II (MIFID) are regulatory projects that have been constant over the year. Going forward these projects will mainly be within FRTB and more specifically in Basel III and IRB (Internal Ratings-Based Approach) modelling within quantitative risk.

Consultancy clients are predicting a busy 2020 to support the implementation of the regulatory changes and in preparation many clients are keen to seek IRB modelers on an interim and permanent basis. The banks are starting to look at direct hires, but this is slow as their preference has been to use consultancies to provide interim support.

In December 2018, Ruaridh Brown-Hovelt, the Head of Risk at Danos Associates predicted a busy year for FRTB and gave an insight into industry views – The Questions Facing FRTB.

IBOR Reform

The need for more Interbank Offered Rate (IBOR) reform support this year has been a big trend and we expect this to continue and likely to get busier in the coming months and into 2020.

Many hiring managers across the industry on the sell side have acknowledged this and the rise in interim support for IBOR transitioning has increased. Candidates with expertise in IBOR and the understanding of how to transition to SONIA are in high demand and can potentially have multiple opportunities to choose from.

Ruaridh Brown-Hovelt, the Head of Risk at Danos Associates explains further about the transition – An update on the risk recruitment market: are you ready for SONIA?

On the buy side, only a few managers I have met during the year have flagged IBOR and the need for expert support, but those who have are very surprised at the lack of acknowledgement by the rest of buy side so far – this is an early indication that there will be further growth for specialist requirements in this area.

Technology Impact

With more functions and teams starting to find new innovative ways of implementing Artificial Intelligence (AI) and machine learning techniques into risk management, the need for more technical skills is on the rise. Quantitative candidates with knowledge of certain techniques and processes like deep learning, are increasingly in demand. Especially those with practical experience of applying said techniques to credit risk and anti-fraud.

Most of the banks are restructuring and hiring in the electronic trading risk teams.  Ruaridh Brown-Hovelt, the Head of Risk at Danos Associates wrote further on this earlier in the year – Recruiting for e-trading risk functions.

This is an increasingly competitive hiring space and we foresee more opportunities being created here in the coming months.

FinTech Boom

In 2019 we have seen successful European digital banks and FinTechs expand to support these growth markets around the world, with our global offices filling roles in this space. The speed of the growth creates the need for substantial hiring to cope with the new demands and creates the need to backfill rapidly.

The growth is great for new opportunities in the market, but divides opinion from candidates and clients who have experience from your more traditional retail or investment banks, whether this is something they would or could transition into. The main hiring activity we have seen and filled has been within the framework and regulatory reporting, as well as permanent and interim senior risk positions to help lead and develop the operations.

We have worked with very early stage FinTechs often with the need for experienced resource to design and implement frameworks from scratch, as well as more established firms which have needed to increase capacity to cope with the new workloads.

Katherine Lord, Head of Danos Consulting earlier in the year explained how big the FinTech market had already become and it has only continued to grow, now on a global scale – FinTech is a key driver in the recruitment market.

Conclusion

A year filled with so much change and uncertainty in the market is usually followed by a year of increased demand and decisiveness to get on and make changes. The market has seen a busier Q4 this year, with more headcounts being signed-off and most of the hiring for much needed replacements across the board.

In 2020 we foresee the need for structural changes, expanding and tailoring of teams and functions, and we expect an even busier year across the market.

If you are keen to hear what we are currently fulfilling or our market awareness, please feel free to reach out for a confidential discussion on how we can assist you with your search or provide you with right talent and expertise.