There’s no two ways about it: A lot of financial services firms are still cutting costs, meaning that they are less likely to replace people who have left and may actually be laying people off. That said, risk management is one area where most firms are unable or at least more reluctant to cut anyone, given the high stakes of a misstep in that area. Others are actively looking to grow their headcount of risk managers.
So what do you have to do to get a risk job on Wall Street? And what qualifications and credentials can give you a leg up?
“The most in-demand candidates right now are core modelers in the loss forecasting-space, coming in at the four-to-six-year mark,” said Kareem Bakr, the head of credit risk recruitment, Americas, at Selby Jennings.
Academically, these individuals will typically come from traditional STEM backgrounds, such as statistics and applied mathematics, he said.
Regulation – including CCAR/DFAST and Fundamental Review of the Trading Book (FRTB) – has been the catalyst for much of the demand for risk managers within banking.
“Risk recruitment on Wall Street is pretty stable, because when a bank’s doing well, they have to keep the risk function fully staffed, and when it’s going bad, they have to amend the internal frameworks they have in place,” says James O’Brien, the Americas head of risk management and quantitative analytics at Barclay Simpson Executive Search.
However, with bonuses in the sector decreasing, risk managers have become interested in moving from the sell side to what they perceive to be the less regulated and more attractive buy side, according to Barclay Simpson Executive Search’s 2017 market report on risk management.
Demand for business risk managers has been driven by a need to enhance operational risk and risk appetite frameworks, per the report. Managers with operational risk self-assessment experience have been in particular demand, according to Barclay Simpson.
Banks are creating a number of new roles in enterprise risk management functions with responsibility for providing management with an aggregated view of their risk profile.
Candidates with experience across consumer and commercial backgrounds are always in high demand. Essentials include knowledge of probability of default (PD) and loss given default (LGD) modeling and exposure to Comprehensive Capital Analysis and Review (CCAR).
“Now that CCAR season has just about finished, [hiring] managers with needs in this space now have the time to thoroughly vet candidates and focus on adding a significant amount of headcount,” Bakr said.
Many companies are shying away from the strict demands for Ph.D. graduates and are now more interested in someone with a Master’s degree and real, relevant working experience, he said.
It is common for risk management professionals to get jobs with a B.A. or B.S. degree (it is assumed that candidates with a graduate degree also have a Bachelor's), while M.A./M.S. and M.B.A. placed in second and third place, respectively.
“CFA certifications are a nice touch to your resume; however, most [hiring] managers do not feel it adds too much extra value,” Bakr said.
The CFA is far and away the most common certification among U.S. risk management professionals in the eFinancialCareers Resume Database, while the CPA is a distant second and the Financial Risk Manager (FRM) qualification from the Global Association of Risk Professionals (GARP) in third, gaining momentum.
For entry-level candidates looking to target quantitative roles, he recommends keeping an open mind with regards to job function. Managers are bringing candidates in with the idea that they can be utilized across different functions, for example, someone who can do both development and validation.
The same goes for non-quantitative risk positions, as more companies are looking for a jack of all trades rather than a subject-matter expert. Across the industry, operational risk groups are working closer with model governance and regulatory teams.
“Having a broad knowledge across the board will better position you for the next step in your career,” Bakr said.
Financial services firms typically hire for three risk-management teams: market risk, credit risk and operational risk, with the latter having the most flexibility in terms of educational requirements.
“Market risk and credit risk roles are a lot more stats-focused, because they involve analyzing VAR – value at risk – that is, how much a bank could lose if everyone went wrong, so it’s more quantitative,” O’Brien says.
Many Wall Street hiring managers want candidates with a Master’s in statistics or mathematics for these market and credit risk roles.
“Operational risk roles are more about stakeholder engagement, so candidates need management skills, meaning they’re more business analyst types who have to be very good at talking to managers and managing up to establish operational risk frameworks across the organization,” O’Brien says.
While a Master’s degree is preferred, typically having a Bachelor’s degree is just fine if operational risk candidates check most of the other boxes.
“It’s very rare that a hiring manager will turn to me and say, ‘I need an Ivy League school or a particular degree or course that the candidate has completed,’ with the exception of a PMP or Prince2 certification for project managers or change managers,” O’Brien says. “Credentials will help – if you have courses like that on your resume they strengthen it, but they aren’t must-haves.
“It’s more about the kind of skill set that they’re working on now,” he said. “More often, hiring managers ask about candidates’ longevity in roles.
“They don’t want people who have jumped around a lot; they prefer someone who’s been at an organization four or five years.”
Hiring managers like to bring on risk management professionals who are currently working at direct competitors.
“Investment banking hiring managers are looking at people at sell-side organizations, while asset managers want risk professionals from other asset management firms,” O’Brien said. “Pretty much across the board, Wall Street firms hiring from direct competitors with similar business lines.”
Photo credit: Wavebreak Media/Thinkstock