Salary survey: Traders find jobs in risk management

Risk managers used to belong firmly in the back and middle office. Not any more. Risk management is increasingly a front office occupation and in niche areas people with the necessary skills are in short supply.

Among the jobs currently advertised, UBS Warburg is looking for a quantitative risk manager with a strong mathematical and analytical background.

The headhunter TMP Worldwide is recruiting for a number of credit risk positions, including a credit risk associate, as well as a general risk manager and a business risk manager to work in fixed income.

Positions in risk management fall broadly into three camps: credit risk, or the risk that a bond issuer will default; market risk, or the risk of plummeting markets; and operational risk, or the risk of organisational dysfunction, which covers human error, communications breakdown or poor compliance.

Credit risk experts are particularly sought after. Regulations such as the Basel II banking proposals and changes to accounting standards under IAS 39, as well the credit derivatives boom, have fuelled demand.

Stephen Ferguson, a consultant at TMP, said hiring for credit risk was buoyant compared to other market areas. Alec McCann, a consultant at Robert Walters, said 70% of risk vacancies were for credit risk professionals.

In credit risk, recruiters say potential exposure analysts and portfolio management analysts are particularly scarce. Potential exposure analysts are concerned with traded credit risk and the possibility of credit default given movement in the market. Portfolio management analysts consider aggregated risk across the entire portfolio.

In a report on the risk management market, the headhunter Elliott Ross said hiring for portfolio management experts was being held back by the "very small pool of experience from which to select."

Tom Mardon, manager of the risk division at recruiter Michael Page, confirmed the need for experienced portfolio managers. He said several clients had had unfilled vacancies for more than eight months.

Headhunters say vacancies for operational risk are harder to come by, with many teams complete. But Elliott Ross said there was a shortage of skilled individuals for front office vacancies in areas of market risk, particularly in hedge funds and exotic interest rate derivatives roles.

A distinct skill set is required to work in the new business facing risk positions. Mardon said recruiters for credit risk positions were looking for people with a masters level qualification or above, who are proficient in mathematics and have a good knowledge of derivatives.

Commercial awareness is also necessary. Candidates work with structurers and marketers to ensure products balance risk and commercial gain.

A risk management skill set combined with a trading mentality is ideal. Unsurprisingly, some of those moving into the new risk management positions are former traders.

Thomson said: 'Traders who have been made redundant or who want to move into a position without P&L (profit and loss) pressure find the risk market appealing.'

Salaries vary considerably. Ferguson at TMP Worldwide said a vice president working in credit risk could typically expect a base salary of between 60,000 and 75,000, plus a bonus of between 20% and 30%.

Associates in credit risk would be lucky to receive total packages in excess of 50,000, he said.

However, Cameron Thomson at Elliott Ross said total packages of 300,000 were not unusual for first rate front office risk experts. 'The typical middle office risk manager will receive a basic salary of 65-70k. But front office risk professionals receive a trader's salary plus a revenue-focused bonus.'

Portfolio risk professionals are paid the most. Mardon at Michael Page said that though their basic salaries were similar to those in other areas of credit risk their bonuses werre substantially higher, at 100% of salary or much more.