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After the 2008 Financial Crisis, it became clear
that the banking industry needed to rethink
its approach to risk management. Sweeping
regulatory reforms have revolutionized the way
investment banks do business, which in turn, has
greatly impacted the talent landscape.
Sweeping regulatory reforms
have greatly impacted the talent
landscape
Many of the Ph.D. mathematicians that once sat in
dark corners of the trading floor developing exotic
pricing models are now using statistics to develop
risk models and presenting to regulators. Former
traders have moved from the trading floor to the
middle and back office in risk governance,strategy,
and compliance roles.Technologists have become
more central to the industry as organizations view
IT security as increasingly critical and tech systems
as a way to improve efficiency and thus, profit.
Within financial institutions, business units, such
as proprietary trading, have been shut down
while others have seen explosive growth, such as
CCAR and compliance.Entirely new departments
have been formed, such as the Goldman Sachs
Environmental, Social and Governance group;
headcounts have been re-allocated; and salaries
have changed. However, there is one thing for
sure in the post-2008 world: risk management
has become a central function to every major
financial institution.
The fall of exotic derivatives, structured credit
and other high-risk trading practices has given rise
to an increased demand in hiring for people that
There is increased demand for
banking professionals that know
how to create profit within a
very risk-managed environment
that know how to create profit within a very risk-
managed environment. Many industry veterans
say that the atmosphere—particularly in the front
office—is not as electric, not as dynamic, and not
as sexy as it once was.
From an industry-wide perspective,many financial
institutions have found it difficult to thrive in
this new regulatory environment while some
have struggled to even survive. Krishna Memani,
Chief Investment Officer of OppenheimerFunds,
recently told Business Insider that heavy regulation
has, essentially, reduced once-glamorous financial
institutions to mere “service providers”.
The outlook for the industry is actually not nearly
as dull as some may make it makes it sound. In
fact, it’s very positive. While the days of exotic
derivatives and other highly-complex,risky trading
have dwindled, the new frontier of profit is in the
way banks optimize capital and manage risk within
a tightly regulated environment.
Regardless of how much government regulation
THE INVESTMENT BANKING REVOLUTION:
FROM “RISK MANAGEMENT”TO “RISK
INNOVATION”
3. www.selbyjennings.com | enquiries@selbyjennings.com Industry Insight | Enabling Exceptional Careers
The outlook for the industry
is actually not nearly as dull as
some may make it sound. In fact,
it’s very positive
is imposed on banks, the trait that separates the
winners from the losers will be the ability to
balance risk management against the ever-present
desire for profit. This requires innovation and a
change in mentality away from “risk management
as an obstacle” to “risk management as vehicle
of profit”. Over the next decade, risk—similar to
technology—will be a battleground for innovation
within Financial Services.
Over the next decade, risk will
be a battleground for innovation
within Financial Services
It is also important to note that not all investment
banks have been affected to the same degree.
The difference comes from where the bank is
headquartered given how increased regulation
“trickles down” from the home office. European
banks, such as RBS, Barclays, and UBS, seem to
have been hit harder than Asian Banks, such as
Mizuho and SMBC. To the surprise of some,
several American banks have emerged in the
post-2008 world as winners, such as Morgan
Stanley, Goldman Sachs, and Wells Fargo.
Upon observation,among the financial institutions
that have struggled most to thrive in a post-2008
world are those that have failed to innovate in
a category as central as risk management. The
organizations that will experience the most
success in the future will be those that can attract
and build integrated teams of “risk innovators”,
not just “risk managers”.
Banking organizations must
build integrated teams of
“risk innovators”, not just “risk
managers”
One of the most valued assets (at both the
individual and organizational level) to emerge
over the next decade will be the ability to
develop fresh ideas for managing risk. If you’re
considering a move in the Banking job market,
you’ll find it difficult to find a role that doesn’t
involve some sort of risk management. Because
of this, job seekers need to embrace this new
culture and highlight the skills that complement
it—be prepared to demonstrate, through your
past experience, background checks, network and
personality, that you are a risk adverse candidate.
4. This guide has been brought to you
by Selby Jennings, part of the Phaidon
International group.
Selby Jennings is a specialist provider of
Banking recruitment solutions across
Europe, the US, Asia and the Middle
East.
We believe every professional should
benefit from the advice of a trusted
partner throughout their career.
Contact Selby Jennings, for more
information about career opportunities
in this sector, or if you are looking to
expand your team.
Contact us today:
www.selbyjennings.com
enquiries@selbyjennings.com
Enabling Exceptional Careers
Selby Jennings exists to enable exceptional careers around
the world; we connect exceptional talent, with exceptional
opportunities.
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