Everyone who's anyone is on the lookout for senior risk hires. Is now the time to drop a little business blood into the mix?
Aside from paying risk managers a lot more money, hiring ex-traders and senior business heads to keep risk in check seems a sure route to increasing the authority of the risk function.
As with all good ideas, some banks are on to it already. Morgan Stanley, for example, recently re-hired Kenneth deRegt , a former head of its fixed income, currencies and commodities business, to spruce up its risk management systems.
Risk types say there are plenty of former traders already dressed in risk management garb. "Hedge funds, in particular, prefer to hire people from the business," says the head of risk at one fund management firm. "Rather than an academic guy who sees everything as a model, a former trader or money manager will understand the psychological pain when something goes wrong."
Adrian Marples, head of risk at search firm Sheffield Haworth, says demand for heavy-hitting risk types is at a high, and people from outside the business offer the advantage of a fresh start: "A lot of banks are re-examining the logic behind splitting the credit and market risk functions. A chief risk officer from a non-risk background won't have preconceptions about how things should work."
The risk manager's risk manager
Despite this, plenty of firms are sticking with their knitting and going for traditional risk candidates.
Merrill Lynch, for example, appointed Noel Donohoe, a former head of risk at Goldman Sachs (and chum of Thain's) as its new co-chief risk officer in January. And Deutsche recently appointed Bill Broeksmit
, a former risk consultant, to manage risk at its securities unit (although Broeksmit was apparently instrumental in building up its OTC business in the distant past, according to Financial News).
Big cash for big hitters
High-profile hires can command the kind of cash more commonly associated with a CDO salesman on a good day. Marples says chief risk officers hired externally by major investment banks in the current climate will be looking for between 3m and 5m (in danger money), guaranteed over one or two years.
Lower down the scale, pay's not quite as exciting. Gail Connolly, managing consultant at recruiters PSD Group, says traders moving across to risk can usually expect to earn around 200k max.