Singapore's new risk management market: Are you competitive enough?

Since the financial crisis of 2008, the profile of risk management has been raised, with risk and control functions becoming the centre of attention of how a financial institution operates.

At the same time, the aftermath of the global financial crisis has triggered changes in the regulatory landscape, altering risk managers’ job scopes and adding more responsibilities to their plate.

Given this, what are the key areas where risk managers want their staff to upgrade on - and how can this be done?

Cross risk knowledge

Now that Basel III is on its way, senior risk managers have expressed a growing need for talent with more cross risk knowledge.

For example, a trading credit risk manager needs to be able to think both like a market risk manager and a credit risk manager. Historically however, risk functions within financial institutions have been run in separate silos, which are in turn reflected in today’s talent pool.

As regulatory reporting needs grow, there will be increasing convergence between risk, finance and other control functions as well. In line with this, some banks and asset managers have shifted their focus to enterprise wide frameworks with a more comprehensive approach towards risk management.

Theory vs practice

Employers are increasingly searching for professionals equipped with theoretical knowledge, such as
Masters of Financial Engineering (MFE) for technical areas such as market risk and valuations.

Some risk managers prefer fundamental risk training such as Financial Risk Manager (FRM) and Professional Risk Manager (PRM) qualifications.

These programmes provide invaluable training that enhances the expertise of working professionals within risk. While at the end of the day, those with immediately relevant working experience in a risk role are preferred by employers, we have also seen professionals who have made a successful career switch into banking and finance through these programmes.

These professionals tend to graduate top of their class and have immersed themselves in internships that accumulate relevant exposure towards the roles that they want to move into. Again, hands-on experience prevails.

Hiring managers also recognise that these programmes require investment in terms of programme fees and time. The most supportive bosses have given their blessings to team members who are juggling part-time studies by sponsoring education and providing flexibility in work arrangements, as long as this does not impact their work.

This support for work-study opportunities goes a long way toward employee retention as well.

What else can employers can do?

Besides sending employees for external programmes, financial institutions can also upgrade the skills of their existing talent base by developing in-house training programmes and encouraging cross training and rotation, particularly at the junior level.

Risk managers should also look at their existing teams to identify gaps in expertise, and assess if and who they need to hire to round out the team’s capabilities to add value and to perform.

Whither Volcker?

With impending regulations such as Dodd-Frank and the Volcker rule, increased global financial regulation looks set to change the face of the banking and finance industry.

These new rules create a potential impasse in terms of talent development: how can risk managers learn and implement new systems when these reforms are totally new to the market?

The ongoing regulatory climate has created a very grey area where the only certainty is that things will continue to evolve. JP Morgan’s recent US$2 billion trading loss adds fuel to the debate, and is an irony for an established global bank that pioneered the concept of VaR in the 1990s, and developed its own risk measurement service that was eventually spun off as RiskMetrics.

In the midst of all this, risk managers are turning to informal networks and continued dialogue with their peers. They are asking colleagues in other financial institutions: “How are you doing this on your side? How well is that going? What else have you heard?”

As emerging developments continue on the regulatory front, this exchange of tacit knowledge looks set to persist - with industry players watching not just the news but each other.

Lam Yimin, Consultant - Financial Services Division, Robert Walters Singapore.

Robert Walters is an award-winning business and one of the leading international recruitment consultancies. The Group has a network of 48 offices spanning 23 countries, including the United Kingdom, Ireland, Continental Europe, the United States, Australia, New Zealand, Asia, South Africa and South America. For more information about Robert Walters Singapore, please visit www.robertwalters.com.sg.

Yimin specialises in credit and market risk recruitment for the financial services space at Robert Walters Singapore and can be reached at yimin.lam@robertwalters.com.sg.