Risk management jobs in investment banking are no longer the sanctuary from redundancies they once were. Meanwhile, insurance firms are struggling to recruit risk talent and pay is on the up. Not surprisingly, more people are considering a transition.
As the regulatory environment has become more demanding for insurance firms, they've had to beef up their risk teams. However, a lack of investment in this area in the past has left many firms struggling to find sufficient supplies of talent, says Sandy Begbie, group people and operations director at Standard Life.
"There are a lot of good risk people, but not a lot of outstanding risk people. They are being very well looked after by their current employer and remuneration has increased considerably over the past three years," he says. "This is partly down to demand, but also because large insurance organisations haven’t invested or grown people in these roles. From a career point of view, risk hasn't been an overly attractive path, and this needs to be reviewed."
Demand for top risk people has increased to the extent that salaries have increased by 50-100% over the last three years, he says.
Head of risk roles within a large insurance firm now typically pay £100-150k, suggest recruiters. If rewards are high at the top, however, insurance still lags behind banking for rank-and-file employees. Risk roles typically pay just £45-55k at an intermediate level, suggest specialist risk recruiters.
An operational risk professional with 5-7 years' experience working in an investment bank, meanwhile, can expect £60-80k, according to figures from recruiters Robert Walters. The same level within market risk and credit risk reporting pay £55-70k.
Nonetheless, bonuses in the banking sector for risk professionals haven't been great this year. This – and the fact that some banks have trimmed their risk teams – has led many to consider opportunities in insurance.
"The typical argument for working in investment banking – big bonus potential – isn't the case for a lot of risk professionals in the current market," says Jamie Brimage, risk consultant at PSD Group. "Insurance firms are recruiting, often for newly-created market risk positions and strengthen their ALM (asset liability modelling) teams. This is an appealing proposition and more people are considering them for a better work-life balance."
Risk managers have become more flexible in their job search, agrees Adrian Marples, consultant focusing on risk at executive search firm Leathwaite.
"People who would have only considered a risk role in an investment bank a couple of years ago are now open to the idea of positions in consulting, asset management or insurance," he says. "However, we find that insurance firms often prefer to second senior executives from other parts of the business, rather than recruit risk managers, who often have the technical skills, but not the influence within the organisation."
Similarly, you shouldn't assume that having a bulge bracket bank's name on your CV will automatically make you appealing to an insurance firm.
"Insurance firms want to recruit the best quality risk managers, and if investment banks are making redundancies in their risk teams, I suspect they're still making an effort to keep hold of their best people," says Begbie.