Risk management practices have been thrown into the limelight over the past few years thanks to incidents such as Barings Bank nearly being destroyed by Nick Leeson or, closer to home, the unauthorized foreign exchange losses that plagued NAB.
The need for stricter risk management procedures has led to more and more banks employing econometric modelers for risk management roles. Emma Cassidy, an account director at Bluefin Resources, says that over the past couple of years there's been a real trend in larger banks employing candidates who have both a traditional statistical background and an econometrics qualification.
According to Cassidy, Australian banks have been hiring candidates who have econometric skills because of the increased popularity of econometric packages such as RATS, Eviews and Matlab. These packages are very effective in forecasting and estimating the volatility of portfolios and individual stock positions.
In addition, there are now a number of academic institutions that offer econometric courses, and in turn, this demand has filtered through to the commercial world: "The senior hiring manager for one of my clients is an ex-econometrics lecturer at one of the universities; naturally he prefers hiring candidates who have an econometrics background," Cassidy says.
Due to the high demand for skills in risk management, econometric graduates with high distinction grades and skills in time series modelling are regarded as high quality candidates for quantitative roles. Cassidy adds that some of the candidates her recruiting firm have placed have had limited commercial experience but excellent econometrics grades. Candidates have been offered pay packages of up to A$60,000.
In terms of other salary levels, a typical entry package would be around A$45,000 while candidates with a couple of years experience could earn between A$50,000 and A$70,000. At the other end of the spectrum, experienced hires can earn A$120,000 to A$130,000.