Whether you’re early in your career or still considering if risk management is the right field for you, it’s important to monitor industry trends to make sure your skills and experience line up with what hiring firms are seeking.
The need for effective financial risk management has, of course, been reinforced by the COVID-19 pandemic, but as financial institutions push through the lingering challenges of this crisis – and think about what a return to “normal” might look like – what are the risk types that are likely to be in the most demand?
Robert Iommazzo, Managing Partner of the Finance and Risk Practice at SEBA Executive Search, foresees “tremendous needs across financial risk disciplines” in 2022. As an executive on the front lines of placing risk managers in new positions, Iommazzo projects a particular clamor for people with skills and experience in the operational, ESG, technology, cyber, credit and market sectors.
Where is the Demand for Risk Managers?
During the initial stages of the pandemic, in early 2020, there was an uptick in demand for core financial risk managers, like credit and market risk professionals. Iommazzo says credit analysts and quants will continue to be recruited by banks and asset managers in 2022, but that we’re also likely to see greater demand for non-financial risk managers in areas like ESG, operational risk and information-technology risk. The recent surge in cybercrime, he elaborates, has also led to an increased demand for cyber risk professionals.
There are bound to be even more jobs for IT-savvy risk practitioners as disruptive technologies like artificial intelligence and machine learning further evolve, but Iommazzo expresses some doubt about one oft-mentioned growth sector for FRMs: financial technology (fintech) companies. Some fintechs, he says, serve a niche by lending directly to customers with low or no credit scores – a practice that traditional banks largely abandoned in the aftermath of theglobal financial crisisand its accompanying regulatory and capital constraints.
However, says Iommazzo, most fintechs today lack the balance sheets and/or global footprint to compete with major banks, and it’s therefore likely that we’ll see even more partnerships between traditional banks and fintechs. While asserting that innovative fintechs will continue to disrupt the financial landscape (supplementing, rather than completely replacing, banks), Iommazzo does not expect them to go on a hiring spree for risk managers. “They need people who understand credit, but also customer acquisition,” he says.
Consequently, unlike those who anticipate a big shift in employment from banks to fintechs, Iomazzo sees commercial banks remaining a major destination for risk managers well into the future. Supporting this view is JPMorgan Chase’srecent decisionto ramp up spending on technology and people to solidify its competitive position against the fintech threat.
Regulatory risk is another area that job hunters should monitor. The demand for regulatory risk professionals, says Iommazzo, tends to “ebb and flow.” For example, he says that in the wake of the global financial crisis, there was a huge need for risk practitioners with stress testing knowledge – particularly those familiar with the Fed’sComprehensive Capital Analysis and Reviewexercise.
In 2022, the more changes we see to existing financial rules (including financial crime regulation), the greater the need will be for regulatory risk experts.
Advice for Risk Managers
Iommazzo stresses the importance of developing relationships with other functions within the business to maximize your value and to avoid getting siloed within your specialty. “I can’t emphasize this enough: it’s key to work with the first line to get product experience, operational experience, and financial experience,” he advises, while also encouraging risk managers to build their professional networks to stay on top of industry best practices.
Part of a risk manager’s job is to explain complex issues to their colleagues in understandable terms, so strong communications skills are crucial - both for aspiring FRMS and for risk professionals looking to advance their careers. “The ability to communicate these risks and partner with all of the different business lines sets you up for success as a risk manager,” Iommazzo counsels.
Tod Ginnis is a content specialist at GARP. He is the author of a GARP blog that is aimed at early-career risk managers and professionals aspiring to earn their Financial Risk Manager (FRM) certification.