Speaking at the recent Best Practice Operational Risk Forum at the China Construction Bank in London, Gail Danvers, Director of psd’s Risk & Compliance Practice, discussed current trends in risk management recruitment and the future skills that will be in demand.

The business environment is changing and consequently the role of the risk manager is evolving. The financial services market continues to evolve and diversify, often driven by technology and customer experience.

Recruitment Challenges in 2019

Skills

2019 has seen new challenges in Risk Management recruitment. The desire to hire Operational Risk Managers with very high levels of technology capability, whether in specific areas like cyber risk or IT security, has increased significantly.  However, so has the appetite for these individuals to have soft skills and high EQ’s, with abilities such as influencing, communication, stakeholder management and dealing with the first line effectively.  Bringing the two skill-sets together can make for a challenging hire.

 

Salaries

Salary increases in 2019 haven’t been as significant as in previous years. Whereas candidates would previously move for between a 10-15% increase in package, salaries in 2019 came in lower and consequently we’ve seen an increase in candidates declining offers.

 

Competition

Competition for talent is changing. Historically, risk professionals would look at several banks to secure their next career opportunity but now they are also considering roles with Google and Amazon. This is changing the status quo because the remuneration and benefits on offer and the cultural environments are entirely different at technology based businesses.

 

Diversity & Inclusion

Most employers appreciate the benefits of a diverse and inclusive workforce and the numbers speak for themselves. Productivity is much higher and outcomes are far better. Increasingly we are asked to produce 50/50 gender equal shortlists, when the population of candidates available may be as small as 80/20. Producing a gender equal short list in these circumstance is achievable but does require more time.

 

Roles in Demand and in Decline

Cyber and IT risk is an area that continues to grow. Conversely, we’re seeing a decline in some of the risk reporting areas with increased automation and use of artificial intelligence reducing the size of teams required. There has been a lot of talk in the profession about Operational Resilience, but the number of vacancies we’ve had to work on has been very low with more internal redeployment of staff into these roles.

Generalist roles are in decline, with SME banks incorporating the more specialist functions of the larger banks where possible. Combining Risk & Compliance into one role or first and second line risk responsibilities into one roles is increasingly less common with the SME banks.

There has been less demand in banks for second line operational risk management hires.  The main reasons for this are that most banks have now appropriately resourced their 2^nd line,  made clearer distinction of the first and second line activities and therefore increasing the responsibility of the 1^st line, as well as cost.  However there has been an increase in second line risk management hires in Asset Management, and operational risk professionals are making the move – as the opportunity to progress into a CRO role appears more achievable for an Operational Risk professional in an asset management firm rather than a bank.

 

Future Skills

Keeping current is absolutely crucial for risk professionals, ensuring that they continue to develop their technology skills and understanding of systems. Equally, it’s no longer sufficient for an Operational Risk Manager to simply produce a report and send it, they have to be able to engage with the first line, develop effective stakeholder management relationships, work collaboratively with other parts of the business and, increasingly, participate in in strategic talks. Commercial acumen is essential and therefore Risk managers that aren’t mindful, empathetic or appreciative of the desire of the business to grow will find it difficult. They have to be able to put a commercial lens on what they’re doing and understand its’ benefit within the context of the strategic objectives of the business.

 

Remuneration & Benefits

When interviewing candidates we always ask about their motivations for looking to secure a new role. People will often talk about career enhancement and professional development, but salary remains the primary factor.  It’s typical for a candidate to move for a 10-15% increase in total package, and very rare that somebody will change roles for less than 10%.

Currently there is far more interest around non-financial benefits, such as flexible working, extended leave or reduced hours. Risk professionals are looking for more flexibility and a better work-life balance when considering a career move. But whilst this is becoming more common, so is the demand for employees to be available and responsive outside of traditional office hours. This is much more apparent with the likes of Google or Amazon, fintech or start-ups. Rather than paying you to work 9 – 5, they are paying for the work you produce – the hours that you do are yours, as long as deadlines are met. That’s very attractive to the younger workforce.

 

Outlook for 2020

The political landscape and what a post-Brexit UK looks like will have a significant impact on recruitment. The positives are that there is growth with new entrants into the financial services sector and new banking licences being approved. The Financial Services firms are developing, and businesses like Amazon are also going into finance creating more opportunities. The financial services market continues to evolve and diversify, often driven by technology and customer experience.  Businesses are becoming more aware of their environmental and social impact. Climate change has really come to the forefront in 2019 and customers and investors want to know that their money is being used for in appropriate ways meeting ESG standards. Being able to demonstrate that to customers and investors is becoming far more important.

IR35 will change the contracting market significantly from April 2020. We’ve seen an increase in contracts that will end in March 2020 and contractors are already seeking legal advice as to whether they are inside or outside of IR35. (Click here to read our advice to clients and contractors).

The competition for talent will continue; attracting the best talent and developing that talent internally is crucial to business success and something that will be as equally important in 2020 as it has been to date.