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Credit & Risk Management

CREDIT & RISK MANAGEMENT MARKET COMMENTARY, Q3 2019

• Article by BRUIN Financial

CREDIT & RISK MANAGEMENT MARKET COMMENTARY, Q3 2019

INTRODUCTION
Over the past three months, with the deadlock in Westminster over Brexit showing few signs of being broken, consultants on the Credit, Risk and Quantitative Analytics desk at BRUIN are frequently being asked by candidates about the impact of this on the hiring landscape across Financial Services in London and in Europe. Whilst it’s an inescapable truth that uncertainty about the optimal geographical location of certain roles in a post-Brexit world has led to a reduction in pure numbers of positions coming to the external market, candidates should be mindful that, given this increased scrutiny, any positions that are signed off to be recruited are overwhelmingly likely to be secure in the event of any possible Brexit scenarios. Therefore, candidates should view those vacancies that are being hired in spite of everything else as business-critical, and not have concerns about moving into them based on potential future Brexit outcomes.

Overall, Q3 followed a predictable pattern in terms of hiring volume, with July and August proving to be relatively quiet, followed by a spike in hiring activity in September across both buy and sell side organisations. What has been encouraging to see from our perspective has been the advent of some new senior roles in the Risk market, candidates for which had been previously starved of opportunities in the first half of the year. Another change to the candidate market overall has been the increasing willingness of contractors and consultants to make themselves available for permanent opportunities, as the spectre of IR35 looms on the horizon. Firms and hiring managers are seemingly in two minds over this; whilst some are happy to see an increase in the number of potential candidates for positions, others are sceptical about the long-term motivations of career-contractors to go into permanent work for the long haul.

ROLE PROFILES

Quantitative Analytics
In Q3, the buy-side proved to be a very active for Quant candidates, with firms seeking candidates to optimise trading and investment strategies, make sense of large datasets, and build out software infrastructures. There are an increasing number of roles coming to market where candidates are expected to be able to straddle the financial and IT worlds, and thus candidates who come from computer science/software engineering backgrounds who also understand financial products attract a significant premium in terms of compensation.

Where hiring was taking place on the sell-side, it was within the Model Validation space, mostly concentrated at AVP equivalent level in banking organisations, fintechs and consultancies. Candidates are increasingly being asked to take on more models as part of their validation tasks, and those that can validate multiple model types tend to be the ones who are preferred by firms. The majority of Data Science hiring in the past Quarter has been seen in the Insurance sector, with “InsureTech” firms looking to disrupt the traditional insurance brokers by using advanced machine learning and artificial techniques to do the job of actuaries. BRUIN held a seminar around this topic at the start of the quarter, more information on which can be furnished on request by contacting Tim Holbrough.

Market Risk

Hiring within the Market Risk sector in Q3 was mainly concentrated in the Tier One banking organisations at VP level. Towards the end of the quarter, we also started to see more senior roles coming out of subsidiary banks, mainly focused on heading up desks for particular asset classes. Most of these positions have come about as a result of replacement necessity. Given the regulatory face-off required in these positions, there has been an element of inertia in terms of expanding Market Risk functions, as firms are unsure where regulators will require staff to be based post-Brexit.

IT Risk / Cyber Security

In contrast with many other sectors, where senior hiring has slowed down, Q3 has seen a number of banking firms look to make perm hires at Senior Director/Head of level in these fields. This is a sign that this is seen as a crucial area of reinforcement moving forward. With the advent of IR35 regulations, the IT Risk and Cyber Security markets, which lend themselves quite strongly to the contract market given their project-based nature, are potentially set to undergo a significant change. We are already seeing candidates who have historically contracted in this space become more open to permanent opportunities, and we anticipate that this trend will continue into the final quarter and beyond.

Operational Risk

In Q3, there was a lot of hiring at the senior end of the market across the lines of defence, and also a significant number of firms looking to hire senior first line controls candidates. The latter roles are newly created, as buy-side organisations seek to emulate the model of “chief control offices” that have been established in Investment Banks for many years.

On the sell side, hiring was consistent with previous quarters, as firms sought to build out their second line of defence, and sought candidates with broad experience across sectors and risk types to bring a holistic approach to managing operational risk.

Credit Risk
Credit Research on the buy-side underwent somewhat of a renaissance in Q3. Having been previously an area of relatively little external hiring, a number of funds have been looking to add experienced professionals to existing teams, possibly as a way of adding diverse methods of generating research within relative sectors. Of particular note have been mandates looking at Autos and Industrials, given to us on an exclusive basis by one of the world’s largest asset management firms.
From a Credit Risk perspective, we have continued to see demand for candidates to look at NBFI portfolios, as well as from broking firms and emerging markets banks to cover commodities portfolios. This has mostly been at the analyst/AVP level.

Investment Risk
Q3 has seen a number of senior regulatory-focused Investment Risk come to the market, as UCITS and AIFMD regulations start to have a significant impact on how firms monitor investments. Candidates who have experience dealing first-hand with regulators have, unsurprisingly, been favoured over those who haven’t. Furthermore, candidates have been required to have been involved in the regulatory side of new product launches.

EUROPE
From a job flow perspective, Q3 saw a noticeable slowdown in job flow across Europe, which was to be expected given the holiday season tends to be more uniform on the continent. One notable exception to this was our successful completion of a CIO mandate focusing on Technology Risk. We also held a networking event in Luxembourg, attended by many Heads of Risk/CROs, more information on which can be found by contacting Aaron Crowley.
We are also delighted to announce that we have hired Nick White from a international recruitment agency to focus on Risk and Compliance in Europe.

DIVERSITY IN RISK
BRUIN’s Credit, Risk and Quantitative analytics consultants are entrusted by some of the worlds’ largest and most prestigious FS organisations to provide strong and diverse candidate shortlists for niche positions. We are also advising firms on how they can ensure that they are putting themselves in the best position to make diverse hires.

“Where do you see yourself in x years time?” is a timeless interview question; designed to illicit from candidates their career aspirations, for measurement against how they fit with the short, medium and. long-term goals that the firm and manager have for the position, and to confirm that the candidate has thought seriously about their career progression within the prospective organisation.

Perhaps by linguistic irony, or just sheer coincidence, hidden within the core of this question is a perhaps more pertinent question for firms when trying to make diverse hires: “do you see yourself?” If there is a lack of diversity in both the interviewing panel and external marketing of the firm, then the overwhelming likelihood is that the answer to that question is “no”, and the answer to the wrapping question is “not here”.
We encourage our clients (especially when hiring for roles where candidates are in short supply such as the ones out desk work on) to incorporate diversity into their interview panels; not as a tick-box exercise, but to market the firm to external candidates as one where people from their background can thrive.

 

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For more information about the market or current opportunities please contact one of our Consultants.