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Guest Comment: The shift in risk – Why jobs in this sector are moving away from banks and towards consultancies

Australia’s largest financial institutions and corporates are looking to develop strong and trusting external partnerships to help manage their risks in an increasingly regulated global economy. As we collectively assess the best ways to minimise risk, satisfy regulators and optimise operational performance in the post-GFC environment, external advisers are strengthening their teams and offering value-for-money, strategic risk solutions.

We are seeing a shift in talent from traditionally mature risk industries, such as banking, towards the results-oriented consulting industry. This is in line with broader economic imperatives in Australia. Our aging workforce and dearth of home-grown talent means we must become more productive with fewer people. Consulting practices offer time-specific, cost-specific and industry-benchmarked outcomes for their clients.

Heavy hiring

PricewaterhouseCoopers has engaged Marshall McAdam to help double its number of industry consultants, directors and partners over the next 18 months. Lead by Richard Gossage – a former senior executive of two international banks, including five years as Group CRO – PwC plans aggressive expansion in Australia.

Instead of being a specialist in certain categories of risk, or treating risk as a subset of other consulting offerings, PwC is developing a broad, horizontal service across the following areas: operational risk, regulatory risk, enterprise-wide risk, credit risk, market risk, treasury, capital and liquidity, and insurance risk.

Figures on the Australian risk advisory market from 2009 help explain the enthusiasm for this refocusing of priorities. Most people wouldn’t realise that risk consulting generated in excess of A$660m in that year alone.

Room for the big four to grow

The small niche consultancies – which are estimated to have generated about $250m in revenues in 2009 – are by far the largest contributors to this industry. In comparison, the big four consultancies, with their hundreds of consultants and their high-profile client base, only managed about $150m in the same year.

Not only is there ample room for any of these large practices to improve its share, but the size of the market in Australia is also expected to continue growing for the foreseeable future. PwC therefore wants to expand its network and attract the best talent from the broader risk community.

The banks pull back

In contrast to this bullishness, we’re seeing a shrinking demand in the traditionally stronger employment markets for risk professionals, such as financial services, mining, government and energy.

Falling budgets have caused a squeeze on costs and a greater drive for efficiency and productivity within these sectors. Rather than building and maintaining large teams of risk professionals, these organisations are increasingly recognising the value consultants and co-sourcing can offer in keeping on top of regulatory and financial change, while still managing costs.

We’re very much in the early stages of the shift towards risk consulting, but my view is that it will continue to grow over the next few years. Although not every business has actively embraced this trend yet, there is a definite propensity for companies to try to improve productivity and achieve better results by developing a trusting relationship with a consultancy.

Are you right for risk advisory?

Not everyone is suited to risk advisory, but if you’re contemplating a broader and more challenging role, it’s an excellent time to make that move. You should have strong technical skills (either quantitative or qualitative), some project experience, and be commercial and assertive in your outlook.

Toby Aikins, client advisor, Marshall McAdam

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