The middle office manifesto

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Want to make the middle office more ferocious? Here's how...

According to "senior bankers" who confided in the Financial Times, the pickle at Credit Suisse might have a little something to do with the fact that investment banks are places where there's generally "a culture of deference by risk managers to successful traders".

In the case of Credit Suisse, it seems risk professionals and product controllers tried to challenge its traders' valuations for sparsely traded CDOs and CMBS products, but that the successful traders didn't take an enormous amount of notice.

A doyen of the hedge fund and investment banking risk management realms describes the broader problem thus: "At the end of the day, banks aren't willing to pay the extra 100k-200k to attract serious players into risk management. After all, what's the point in paying someone serious cash when you have no intention of listening to their recommendation and all they are is a pretty face for investors?"

Our manifesto for a middle-office revolution is therefore as follows:

Pay them more money.

Pay them more money.

Pay them more money.

Higher pay might make the risk management profession a little less pretty in the eyes of senior management, but that's no bad thing. It's time for risk managers to get ugly.

Feel free to join the march for the middle office by adding your comment below. (Alternatively, let us know if you think risk managers and their ilk should be paid a pittance and forced to do the coffee run.)