Risk Q3 2017 Permanent Recruitment Market Update

Risk Q3 2017 Permanent Recruitment Market Update

Recruitment in Risk throughout Q3 refused to slow down.

Investment Risk

July, August and September saw several high profile moves between competitors, which followed with risk teams being restructured. Long serving employees found themselves on the market in unfamiliar territory due to redundancies. These decisions brought opportunities for start ups to take advantage of senior talent with most of the acquisitions being with systematic funds and fin-tech companies.

For junior candidates we have seen few opportunities due to growth, with most of Q3’s placements coming from attrition. One positive for technical risk profiles is the demand for candidates with excellent coding and data skills to ultimately assist with asset allocation, help to suggest trade strategies for portfolio management and finally, portfolio optimisation. The skills and experience in demand are excellent Python programming, experience in manipulating databases and excellent product knowledge.

Market Risk

Market risk hiring in Q3 was challenging. The usual suspect skill sets are still in demand but clients are looking for the “A*” candidate and they are more than willing to wait for the right candidate which has made some processes somewhat slower and also clients are not as quick to the pull the trigger.

Methodology changes are still at the top of the agenda, this ensures that banks have Fundamental Review of Trading Book regulations in place and in turn ensures they have reached the standards required. A key skill set that has progressed from Q1 and Q2 is the demand for candidates with good market risk methodology knowledge and an expertise in either VaR models or IRC, in order to understand and help move toward expected shortfall and default risk charge respectively.

Candidates with varied market risk asset class experience on the traded market risk side have still been in demand. Interest rates experience and FX still remain at the forefront of many hiring managers' requirements. We have also seen varied roles where a strong market risk regulatory capital knowledge is something that clients are eagerly seeking. Prudential regulatory authority interaction is also a big positive to see on CV’s.

Quantitative Finance

Quantitative finance has been booming in 2017 and we expect this to continue into 2018. This is due to direct interaction with increased regulation models being enforced and also new regulations that are being imposed on many banks who are seeking to expand their model development and validation functions across traded and credit risk, covering both pricing model and risk modelling. Cross asset model exposure is highly desirable, as well as a recent focus on pricing experience which we feel will continue into 2018 and beyond with many banks' regulation models being recalibrated.

Backgrounds in statistical modelling is in demand in Q3 whilst candidates with strong coding experience in VBA or R are very desirable. Fixed income knowledge has been the product of choice in 2017. Although having cross asset class experience is always very desirable by clients, derivative pricing and strong coding skills in Python or C++ are in particularly high demand.

Hedge funds and asset managers are taking over this landscape and we have seen many banking candidates waiting out to work for a big fund and use their quantitative skills in order to take it to the next level. In some cases candidates have been taking pay cuts to achieve this dream. However, the funds tend to want the best of the best to be considered from a banking background and they are willing to reject many candidates to find the perfect fit.

Credit Risk – Investment Banking

Credit risk hiring in Q3 has been mixed. We have seen a key trend of hiring many candidates with leveraged finance experience and we have also seen a sharp rise in skill sets for candidates with extensive LBO deal experience. Oil and gas expertise has also been something we have seen a small but sharp rise in hiring during Q3. One of the key factors causing this surge could be the increased deal volume in the leveraged finance space which has seen a subsequent effect on hiring.

Hedge funds and private equity analysis as a portfolio has also seen a rise in hiring in Q3. Candidates with strong equities experience have been very sought after. Clients are also looking for people with cross asset class experience, as well as the ability to liaise with key external stake holders. These have both been plus points for candidates to have on their profiles.

The back end of Q3 was quiet with many managers assessing their hiring throughout 2017 and also going into Q4, establishing whether the hires they are going to make will be critical for the bank. Already in the first few parts of Q4, we have seen a hiring increase and candidates continue to come to the market eager to move in anticipation of poor bonuses coming in 2018.

Credit Risk – SME and Fintech

FinTech and the SME market in Q3 has continued to go only one way - upwards. The increase of new peer to peers and challenger banks who have had their FCA licences approved has had a knock on effect on hiring, with a rise in hiring as a result. SMEs are also more confident in the market, realising that there are now many lenders with alternative products who can lend and support them as they seek financing options.

From our update in Q2 there has been a particular onward trend for a high demand of talented candidates who have a wealth of experience across SME lending and business finance - prior experience within P2P is a distinct advantage for many clients as it's important that candidates have a strong understanding of the platforms and technology involved. Underwriting and credit analysis skills are still at the forefront of many mandates as well as ensuring that candidates are keen to be hands-on and pro-actively involved in the development of their credit functions, frameworks and policies.

In terms of talent pools, there is a good selection of more seasoned and experienced candidates in comparison to the junior end of the scale.

Operational Risk

Operational risk has been busy in Q3. We have seen a sharp rise in the demand for an in-depth understanding of operational risk frameworks and hands on experience of implementing/rolling out processes. Other sought after skills include scenario analysis and deep dives experience. High calibre candidates with strong academics are generally preferred and tend to find roles very quickly.

We have also seen a steady stream of VP level roles coming into the market from the back end of Q3 and the start of Q4 as well. Most of these positions are a hybrid, with a second line of defensive focus but more and more of these roles seem to have a hybrid focus and are not just straight forward operational risk roles. Candidates with an audit background are also being sought after to make the switch to operational risk and also make a move into consultancy.

Deepan Sakthithasan's picture
Manager | Risk Management
dsakthithasan@morganmckinley.co.uk