Demand grows for more commercial risk professionals

In the last five years, we have witnessed a fundamental shift in the focus on risk talent, particularly at the senior end of the market. Gone are the days of market risk as a controlling, reporting function; now there is a growing drive for senior risk professionals to be commercial in their approach and act as business partners to their commercial colleagues.

When we are searching for risk talent today, we are increasingly briefed to seek out individuals with strong communication skills, who are comfortable sitting next to traders and not afraid to challenge where necessary. Those that are commercial and better understand the market are judged to be able to provide a more solution-orientated approach to risk, protecting the business while at the same time finding ways through issues to enable the trading team to make money.

To take it a step further, there is an increased demand for mid-level risk professionals who exhibit in-depth market specialisms, in areas like LNG, gas or power. With Market Risk Managers now sitting much closer to the traders, and informing real-time decisions, there is a need for more subject-matter experts. And when it comes to Chief Risk Officers, it is not unusual to see a business specifically set out to hire risk professionals who have experienced the other side of the coin and been in commercial roles previously, to further enhance that ability for front-office communication. Ex-traders arguably understand the pressures their colleagues on the desks are facing better than anyone, and can have credible relationships and meaningful dialogues.

To be clear, this is not about businesses hiring yes-men in risk, who will sit upfront and stop getting in the way of risky trades. It has never been more important for risk professionals to do their jobs properly – companies know that, and a culture of separation of responsibilities is critical. However, organisations are waking up to the benefits of doing risk in a more sophisticated way, for the benefit of the bottom line.

There is still a place for the number-crunching risk experts who are at home behind the scenes, but commercially-minded senior risk professionals are now in high demand, albeit not necessarily easy to find. We advise firms looking to fill commercial CRO mandates that they will have to cast the net wide, and may need to search globally, because once businesses have developed strong risk professionals, they do not let them go easily.

As risk professionals get more commercial, there is also a growing danger that first-rate talent will be lost to the front office.

With all these challenges, companies need to focus on working hard to sell their risk roles in a way that attracts the most desirable talents, and offers them a long-term career path as their commercial market knowhow continues to add genuine value.