The new zeitgeist: jobs in liquidity risk

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Despite the fact that deadline for implementing the FSA's new liquidity rules are fast approaching, nearly half of UK banks are still unprepared. But, as they begin to get their houses in order, new opportunities are being created for risk managers.

The FSA's rules are due to come into affect on 1 December, and will require banks to conduct more frequent and granular stress tests, as well as shake up existing liquidity risk management practices.

But a survey of the 2,800 firms that fall under the new rules by regulatory think-tank JWG-IT shows that just 52% feel they are able to meet the FSA's requirements.

PJ Di Giammarino, chief executive of the JWG-IT, suggests that the remaining firms are engaged in a frantic race to comply, which is driving requirements for a special type of risk manager.

"There is a significant amount of change project work in the banks in order to be able to comply with the FSA's regulations," he says. "This is requiring a new breed of risk professional not typically found within these institutions. They need to take multi-disciplinary view and understand wide range of products to be able to make judgments about what kind of liquidity risks are being carried."

But recruiters suggest specific roles around liquidity risk are not yet materialising in great numbers, but that an understanding of issues around it is becoming increasingly desired.

Hannah Jeffrey, manager, risk management & quantitative analysis at Robert Walters, says: "Liquidity has certainly been a talking point this year, and has increasingly become a requirement within market risk and treasury roles. However, this has yet to translate into growing a department from scratch or increasing risk team sizes."

Di Giammarino believes that skills around liquidity risk management are still scarce in the City.

"You can liken it to other risk management skill-sets, but there's more to it than that. You have to be able to walk and talk the language of the business, while also thinking about the implications of how one then manages liquidity risk across a range of sectors, " he says.

The FSA said: "Everyone is expected to be in full compliance with the systems and controls requirements by December 1 and we will spot check firms' compliance. Non-compliance will have regulatory consequences."

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