We all know how yesterday’s hero on Wall Street can transform overnight into tomorrow’s villain.
But what about those dull blokes in the corner, the ones who rake over deals and pick financial nits to spoil everyone’s fun – the risk managers that everybody preferred not to think about? Could they be the swinging dicks of tomorrow?
Risk management, at least according to the CEO of one of the (formerly) hottest banks in investment banking – Goldman Sachs – is set to become one of the sexiest fields in the battered world of finance.
In Monday’s FT, Goldman chief executive Lloyd Blankfein calls for greater power and independence for risk managers. In a rumination on the causes – and lessons – of the global financial crisis, he says risk managers need to have “at least equal stature with their counterparts on the trading desks”.
Not only that. “If there is a question about the value of a position or a disagreement about a risk limit,” he notes, “the risk manager’s view should always prevail.”
What’s more, Blankfein – who along with other US financial heavies is testifying this week before the House Financial Services Committee – seems determined to put his money where his mouth is, so to speak:
We collectively have a lot to do to regain the public’s trust and help mend our financial system to restore stability and vitality. Goldman Sachs is committed to doing so.
No doubt then we’ll see more of the bonuses and big offices that were once the preserve of dealmakers and other masters of the universe going to risk managers at Goldmans.
Funnily enough, on the same day, the FT reports on a survey that has found that more than half of Britain’s top companies are looking to strengthen their risk management teams as “the deepening economic crisis forces directors to question ill-fated investments and prepare for new uncertainties, such as suppliers going bust”.
The Association of Insurance and Risk Managers (Airmic) said that in a private survey of its 450 corporate members (which included most FTSE 100 companies), 59 per cent said their level of interest in enterprise risk management had increased over the past two years, according to the FT.
And in another encouraging sign for the rising new masters of the universe, UK recruitment agencies are also expecting a huge rise in demand for risk managers, the report noted.
GRS, a consultancy, predicts that by the end of 2009, half the UK’s financial services companies will have a risk professional on the board compared with only 12 per cent last July. Overall, GRS estimates UK financial risk roles will increase four-fold by 1,000 to 4,000 over the next 18 months. Not bad for an industry shedding jobs at a lightning pace.
Risk managers, notes the FT, “have long found jobs in insurance and banking, but they are now likely to find jobs elsewhere in business. Some may study trade risk for retailers while others could serve as quantitative analysts in financial institutions that devise mathematical models”.
So not only are they the rising stars. In the peculiarly topsy turvy world of finance, they are also tomorrow’s quant analysts.
Related links:
Do not destroy the essential catalyst of risk - FT
Recession forces risk management rethink – FT