Life as a risk manager
Working in risk is one of the hottest areas to be in financial services, particularly in today’s global economic context. Following the 2008 financial crisis and current fragility of the global economic climate, organisations today are focusing on minimising risk for their organisation.
Therefore risk professionals – especially experienced ones – are in high demand. Virtually every organisation need at least one risk professional in place.
Risk is so niche
Working in risk is an extremely niche area that may be a challenge to get into – because supply meets demand, and demand is minimal in volume even if it is one of the most active hiring areas right now. Risk professionals would know how competitive it is to work in this area, and while it is difficult to get into, professionals often rise very quickly.
Explaining the role
There is a common misconception that risk managers are often frigid because of the technicalities involved in the job function. However, risk professionals today also need soft skills to help them move up the ranks - In fact, the higher up you go, the more important communication skills are for you to deal with all levels of professionals across the organisation, and to handle stakeholders.
Ultimately, a good risk manager is able to play the balancing game well – in terms of managing risk, and to manage the expectations of people at the same time.
Professionals often begin in risk reporting and obtain some technical certification, such as a Masters in Financial Engineering.
What you need
As a risk professional, you need to have technical skills. For example, a risk manager specialising in market risk would involve these job responsibilities:
- To develop a risk management framework for the clearing of OTC (Over the counter) Financial Derivatives Products eg. IRS, FXF, FRAs, Total Return Swaps. The focus will be on margining methodology, valuation, stress testing
- To develop risk monitoring tools that will facilitate prompt review and analysis of exceptions to key risk measures eg. Delta, PV01s
- To work closely with business colleagues, potential clearing members, potential partners in the clearing facility in developing the risk framework
- To work closely with technology vendors to implement the risk framework and parameters
- To develop programmes to model the margining methodology, valuation and stress testing of OTC Financial Derivative products
Your career path
Professionals often begin in risk reporting and obtain some technical certification, such as a Masters in Financial Engineering. Armed with this post-graduate qualification, professionals can then take on roles such as an assistant risk manager, before finally becoming the head of the risk department – after typically 5 to 8 years’ experience.