The rising profile of the counterparty risk professional

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Considering the current climate, it's not surprising that bank's are increasingly concerned about counterparty risk - the chance that a partner in a deal may default - and specialists in this area have witnessed something of a reversal of fortunes recently.

"Counterparty risk is probably the most pressing issues facing many banks at the moment, especially from other banks," says Christopher Whalen, managing director of Institutional Risk Analytics.

One recent example of how this increased anxiety has manifested itself is through higher volumes within interdealer broker Icap's post-trade services business, which covers the clearing and settlement of trades.

Adrian Marples, principal consultant at recruiters GRS Risk, believes that banks have been forced to bolster their counterparty risk teams this year.

"Before the crisis started, a lot of banks had started to offshore some of their counter-party risk work to lower cost locations, such as India, where cheaper labour could collate the information to then be signed off in London," he says. "Now, though, banks are looking to hire individuals in the UK who can provide much more fundamental analysis along with adpoting a portfolio approach to the management of risk."

He adds that these skill-sets are relatively difficult to find and that counterparty risk professionals are suddenly finding themselves much busier, and well-regarded by their current employer.

"Most of the hiring is taking place at a VP or AVP level," says Marples. "At that point, a credit analyst can take full responsibility for a portfolio without expecting management responsibilities - firms want doers rather than directors."

Whalen, however, believes few firms are adding headcount in this area.

"There may be some hiring on the margins, but most institutions are doing with what they've got in terms of staff," he says.

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