H1 Risk Recruitment Update 2017

H1 Risk Recruitment Update 2017

Alfred Waddams 05.09.2017

In this blog we take a look at the all the latest trends in the Risk sector in the first half of 2017.

Market Risk

Traditional market risk during the first half of the year has been very quiet. We have seen more roles looking at market risk reporting due to the upcoming ring fecning regulation. Within market risk, organisations are looking to hire permanent staff due to many different cost saving initiatives, as well as trying to retain the knowledge within the bank.

There has been some hiring of junior risk analysts in the contracting space, mainly being desk specific analysis roles in order to prepare for the coming FRTB regulation. They are looking for people with strong academic backgrounds who have an understanding of VaR drivers and the Greeks, along with good programming skills in VBA as a minimum, looking highly on people with slightly more programming ability in C++ or Matlab.

Quantitative Finance

Quantitative finance on the contract side has been fairly buoyant during the first half of the year, with banks preparing for the upcoming regulatory changes that will affect them. The pricing model validation and model risk areas have a relatively high volume of roles, with experience desired being knowledge of pricing specific asset classes from vanilla to exotic products. Knowledge of SR11-7 within these model validation roles is usually very beneficial even if the regulation does not affect the bank, due to this being a good standard of practice to adhere to for model development, documentation and validation.

We have also seen an increase in market risk quantitative roles, due to the impending FRTB. This has not been as busy as predicted due to the implementation date for FRTB being pushed back, however, we have still seen roles covering full revaluation VaR along with methodology enhancements to different work streams within FRTB, whether that being working on the conversion to expected shortfall or looking at the change from IRC to DRC.

There has also been an increase in the amount of roles we have seen in the Margin Methodology space, where people are looking at their SIMM models and looking to enhance these. There are also still the counterparty credit risk quantitative roles, where a solid understanding of credit risk metrics is essential. Although within the credit risk area there is IFRS9 on the horizon which will impact impairment methodology, there has not been a massive amount of roles which require people to look at this, with the majority of the roles in this area sitting in projects and change functions. There has been a limited number of these, requiring people who have a good understanding and ability to program in SAS, due to the large number of data sets which are being dealt with. 

The other area of quantitative finance which has grown in Q1 is encompassing candidates who have a good knowledge or understanding of machine learning techniques. With organisations looking into automation of the back office, they are also now using machine learning techniques to work along side traders and help their strategies.

The skillset which organisations are looking for are usually a strong quantitative masters degree or PhD, along with strong programming skills. For market risk quantitative roles, they usually require either Matlab or a C based programming language. For counterparty credit risk quantitative roles, they usually look for a C based programming language, and there has been an increased interest in people who are able to program efficiently in Python. For the roles in machine learning, they usually look for people who have undertaken a qualification in machine learning or AI, or express an high interest into the subject, along with a solid ability to program in R.

Credit Analysis

There have been a very limited number of credit analysis positions advertised by the larger organisations on the contracting side, with a number of these roles being permanent positions. Also, we have noticed that the analysis functions are slowly being offshored or nearshored to cheaper cost locations. Another factor in the low amounts of roles we have seen in these areas is due to the current economic climate, with many organisations migrating to a lower credit rating. 

Operational risk

There has been a slow down on the contract market within operational risk and this is reflected by the buoyancy of the market within the permanent division for this area. There was a spurt earlier in the year relating to first line of defence in operational risk within the front office but this was short lived on the contract side and the roles quickly dried up. The banks would also not necessarily take people from an operational risk background but rather look more at people with front office and even ex traders in to these roles.

The 2nd line of defence has seen the occasional role within framework maintenance or building frameworks relevant to policy change but again there has not been a flourish within the contract market. We have recently seen second line of defence roles with a specific focus in the treasury and liquidity area. This might be driven by new regulations. The third line of defence has remained relatively unchanged as has SOx control. Day rates have maintained at the same rate and have stayed at these levels for the last couple of years. There are always exceptions with some institutions paying better than others and for some firms they still don’t like taking contractors into internal audit maintaining a purely permanent workforce.

Overall the market has been sticky in this area. There have been some but not many jobs, we have come off the back of a referendum, an election and a period of uncertainty regarding Brexit, we have seen banks reducing their contract population and focusing on permanent hiring but that being said, there is talk that Q3 should see an uptick after professional services have seen a downward trend across contract hiring in all areas. 

Alfred Waddams's picture
Consultant | Risk Management Recruitment