If you secure a job in risk and compliance in an investment bank, the first couple of years will be spent learning the ropes and choosing to specialise in one particular area. But how does your career develop and what options are available further down the line?
For a start, it's worth pointing out that job tiles in risk and compliance don’t differ hugely from those in the front office: analyst, associate, vice president (VP), director and managing director (MD) are the key ranks in most banks. But while many people stay at analyst level for the standard three years, talent shortages and rising demand for staff mean that banks frequently offer a step-up in job title for new hires. An inexperience associate looking for a fast promotion to VP might try moving to a new firm rather than staying put.
Building a successful career path in risk management isn’t all about your ability to crunch numbers
In risk, after your traineeship has given you a taste of the different risk functions you will probably get to specialise in market, credit or operational risk. Whatever your area, though, as a junior risk professional much of your early career will be focused on conducting detailed risk assessments, based on statistics, reports and market trends. If you don’t have an analytical mind, then a job as a junior risk manager certainly isn’t for you. You’ll be carrying out quantitative analysis and assessing risk by running figures through complex modelling techniques to find value at risk (VAR) measurements. And you’ll become adept at using financial software.
Building a successful career path in risk management isn’t all about your ability to crunch numbers, however. To rise up the ranks you’ll also need to show an understanding of the bank’s business objectives and a passion for staying in tune with financial market trends, government legislation – and anything else that might affect the firm’s risk profile.
While juniors in risk management must be able to work with “the business” (i.e. front-office desks and senior management) by providing them with risk-analysis information, a more mid-level role will demand that you can actually influence – and when appropriate, challenge – front-office decisions.
Senior risk jobs provide the opportunity to develop, finalise and implement risk policies and procedures. You might find yourself working with the global risk management leadership team and even the bank’s board of directors to establish and quantify the bank’s so-called ‘risk appetite’, the level of risk it is prepared to accept. A chief risk officer (CRO) typically sits at the top of the risk management tree, supported by risk heads across different functions and regions.
Such is the demand for compliance staff at banks that juniors in this function are given a broad range of responsibilities as soon as they finish their traineeships.
Just as young investment bankers spend countless hours crunching Excel models, at the start of your compliance career you will typically be focused on relentlessly researching changes in regulation, and how they affect the business. You might also be preparing for and managing inspections by the regulator in your country and helping to maintain a timeline of regulations – when they are proposed to come into effect and when new processes and policies will need to be implemented by.
There will likely be a big administrative element to your junior compliance job – for example, KYC requires much reviewing of files from new customers, while in a monitoring and surveillance role you may be tasked with email and phone-call checking. At the start of your compliance career you’ll also get to grips with complex technologies, such as anti-money laundering software.
As your move into mid-level compliance roles, you’ll move away from merely offering support to your team and will have more responsibility for providing subject-matter expertise to the front-office and responding to queries from them. You may also be tasked to organise training materials and conduct training to keep other teams abreast of your bank’s compliance policies.
At director level and above compliance professionals are responsible for helping to set these policies as part of firm-wide management teams, so only confident people who are willing to challenge senior traders and investment bankers will come this far in their compliance careers. You’ll also need to oversee the implementation of any changes to compliance rules.
Many people don’t make it to the senior ranks in either compliance or risk, however. Staff burn-out is a growing problem now as banks up middle-office workloads in response to a growing regulatory burden. Fortunately, there are exit options – Big Four accounting firms, for example, like to hire risk and compliance professionals into their finance-sector advisory teams and local regulators often poach directly from banks.