Operational risk: itís quality not quantity that counts

Operational risk specialists are commanding higher salaries and tackling more complicated issues as banks focus on increasing the quality of their teams, rather than boosting headcount.

The new Market Survey on Risk Management from Jon Michel Executive Search tells eFinancialCareers that outsourcing of low-level banking jobs to Asia is creating new challenges for operational risk professionals back in Australia.

Mike Ritchie, a risk advisory services partner at KPMG, says outsourcing generates environmental, proximity, language and cultural issues for operational risk people to deal with. But although the work is getting tougher, don't expect a huge rise in the number of jobs.

Ritchie tells us: ìBanks are looking for the right type of operational risk people. They no longer want to recruit 20 analysts at one time, but will be interested in more specialist roles – for example if outsourcing to Asia is a focus, hiring one or two product specialists who understand risk management and speak Mandarin.î

Toby Aikins, a consultant at Jon Michel, says operational risk experts have recently become more accountable and more deeply ingrained in the business. In addition, banks are coming under increasing scrutiny in the current financial climate, pushing risk issues to the fore.

ìThe added responsibility which now lies with ops risk has created a talent shortage for suitably qualified professionals. This has kept the jobs market strong and has driven up base salaries by about 20% over the last year,î says Aikins.

Those with five yearsí experience can command base salaries of about AU$150k, rising to AU$220k-$250k with 10 yearsí. Aikins adds: ìThis is no longer a theory-based role. Operational risk specialists need to be able to work closely with the upper echelons of the business.î

International banks are using the market dip to trade up on their risk staff. Aikins explains: ìThose who have stumbled into a risk management career have been told to leave or been reassigned, as the foreign firms try to source experienced operational risk specialists from the large Australian banks.î

Whatís the best background for ops risk?

Ritchie reckons most operational risk professionals are recruited internally. They have worked in other banking roles and understand how the business works. But some, especially those in quant and other specialist jobs, are hired from consultancies, universities and regulatory agencies.

Risk managers dealing with outsourcing arrangements must be legally savvy, thanks to the need to define the ownership and division of risk between the bank and the outsourcing company, says Ritchie.

Aikins agrees: ìA double degree in law and commerce is an ideal qualification because operational risk jobs often require legally-based approaches to problem solving.î