Risk Management Specialist vs. Generalist: Which Is Right for You?

Aspiring FRMs and junior-level risk managers must choose between two career paths. There is no right answer, but there are pros and cons a young risk professional should consider when deciding whether to become a generalist or a specialist.

Friday, June 9, 2023

By Tod Ginnis

In the 1990s, when financial risk management was in its infancy, credit and market risk dominated the field. Few practitioners even called themselves risk managers, let alone specialists in a particular type of risk.

But risk specialization has flourished in recent years, as many risk managers spend all their time working in sectors like cybersecurity, modeling, liquidity risk or climate risk. Despite this push for specialization, some risk managers are still employed as generalists.

If you’re just starting out in the risk management profession, does it make sense to choose a specialty early on, or would you reap more benefits from being a generalist?

Considering Your Career Options

Maurizio Garro, model risk manager for the quantitative research team at Lloyds Banking Group and director of the GARP London chapter, believes the trend toward specialization will continue. But there is still room for generalists. “If you want to have a wider, 360-degree view without doing any specific deep dive, then generalist could be a good fit for you,” he asserts.

MaurizioG.PicMaurizio Garro, model risk manager for the quantitative research team, Lloyds Banking Group

Generalists are often involved with the company’s overall risk framework or the high-level policy and requirements – without needing to dig deep into details. They are exposed to all the firm’s risks, and often have the opportunity to connect the risk management view with the business view.

Garro expects some will consider the generalist approach more appealing than spending a career looking at one risk in isolation. But demonstrating expertise in a particular niche a hiring firm needs may help set you apart from other candidates, and could lead to your first job.

Given there are opportunities for both specialists and generalists, Garro recommends pursuing the work where your ability lies. Someone with quantitative abilities, for example, is a natural fit for many specialist roles. If you’re having trouble deciding, one option is to start as a generalist to get exposure to all the possible risks that your institution faces; if you develop a passion for one of these, you may then choose to specialize.

It might seem that being a generalist would give one an advantage for very high-level positions like the chief risk officer (CRO), who oversees all of an institution’s risks. But this isn’t necessarily the case.

Working for traditional banks, Garro’s seen most CROs emerge with a credit risk background, given how important credit is to banks. That’s not always the case (think financial technology companies), though, and the best approach might therefore be for aspiring risk managers to simply follow their interests. “If you want to be an expert in cyber risk, go for it,” Garro advises.

However, he also cautions that if you aspire to a top risk leadership position, you should make sure to spend some time getting a broader view of the firm’s risk beyond your specialty.

Focus on Your Team

Early in your career, Garro suggests your most important decision may not be “specialist vs. generalist” – or even your choice of employer. He stresses that it’s vital to find a team with which you are comfortable. “Your manager and your peers make a big difference. You could be at an exceptional company, but if you’re with a team that doesn't help fulfill your potential, it’s not right for you,” he counsels.

Garro also stresses the importance of soft skills, noting that “how you communicate, establish a network, and build your reputation as a trustworthy, competent person” can be just as important, over time, as your knowledge.

If you develop solid soft skills, you’ll likely have the opportunity to move into a leadership position. Indeed, if you think you’d enjoy leadership, great communication can be your springboard.

Of course, not everyone wants to be a manager. “The key message is self-awareness,” says Garro. “If you feel more comfortable sharing your technical expertise without having the responsibility of managing a team, there's nothing wrong with that.”

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.

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