While banks bemoan the impact of Basel IV on their bottom lines, anyone occupying an operational risk job has risen to be thankful for the new regulations. Operational risk managers have benefited from above average pay increases in the past 12 months and Basel is almost certainly to blame.
Historically, operational risk jobs were the worst paid in the compendium of risk positions (market risk and quantitative risk were the best). They're still some of the worst paid, but after increases of up to 5%, a new salary survey from recruitment firm Robert Half suggests salaries in operational risk are catching up.
Operational risk salaries in London now look like this:
And, here's how they compare to salaries in other risk disciplines:
Robert Half says salaries in credit and market risk increased by less than 1% last year. With increases of 5%, operational risk managers are now being paid on a par with market and credit risk managers at senior manager and junior levels.
The assortment of new regulations known as Basel IV are almost certainly to blame. Robert Half says operational risk managers are in demand, as do rival recruitment firms like Eximius. Under Basel IV, it's proposed that banks will be obliged to standardize their measurements of operational risk and to hold more capital against the possibility of misconduct. In combination with the huge $14bn fine levied against Deutsche Bank by the US Justice Department for mis-selling securities during the financial crisis, this is helping focus attention on the need for strong operational risk teams. Suddenly, it seems banks are prepared to pay operational risk professionals accordingly.
J.P. Morgan is among the banks strengthening its operational risk presence in London. - The US bank is trying to fill several roles in its 'operational risk oversight team' which assesses operational risk in the investment bank.
As we noted last week, however, several banks are shifting operational risk jobs out of London and into Poland. UBS, for example, has around 30 operational risk jobs on offer in Krakow now and only six in London. London's operational risk professionals probably don't want their pay to increase too much, or their jobs might just get shunted overseas.