As commercially-minded risk professionals continue to be in the highest demand, losing the best risk talent to front-office roles is becoming a growing challenge for the commodities industry. Individuals who have built up in-depth market knowledge on the risk side are increasingly opting to pursue commercial roles and risk’s enhanced access and proximity to front-office colleagues is aiding this.
Today’s leading risk experts are graduates of top universities, have built close relationships with heads of desks, and have often developed a detailed understanding of a particular market. They are naturally becoming targets for front-office positions.
Organisations are waking up to the need to take steps to promote risk management as a long-term career plan, particularly when there are so many risk roles in the market and firms need to stand out if they are to attract the most commercial talent. There needs to be a level of acceptance that a proportion of the risk talent pool will be using risk as a stepping stone in to the front office, and as such there may be a need to offer those opportunities, while at the same time developing a strong pipeline of candidates to take over.
While there is still very much a separation of roles between the risk professionals and the commercial functions, as they increasingly act as business partners working together to protect the business while at the same time supporting them to make money, so the separation of career paths is starting to blur. One may start out as a risk professional supporting key traders and make the transition into trading, or transfer from trading in to risk; either way that depth of experience will be an advantage to an employer.
We see a growing number of organisations poaching for front-office hires from risk management teams. In many ways, this is the quid pro quo that firms must prepare for, if they are to drive the commercialisation of their risk professionals. But it puts pressure on the talent pool, because while there are plenty of risk experts out there, finding the right one to fit a particular mandate is not easy. Many of the brightest stars with four to five years’ experience in risk are already on some kind of career track to the front office, and are typically unwilling to move companies and give that up.
Firms looking to hire talented risk candidates need to stand out from the crowd, and need to be willing to offer just a little something extra. Whether that’s ultimately a salary more commensurate with what is achieved in front office remains to be seen, but firms cannot have their cake and eat it – if they want risk managers that genuinely understand trading, they need to find ways to keep those individuals satisfied with careers in risk.
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