How much am I worth? Market risk manager, US investment bank
A panel of specialist headhunters give their assessment of typical London pay packages: market risk manager, US investment bank - salary $120,000-$160,000, bonus $300,000-$400,000
It is often said that in financial markets there are two kinds of institution: the traditional, conservative type and the more dynamic, innovative one that seeks out new ways to do things.
Market risk managers face the biggest challenges at the latter, as they manage potential risks from market movements in such areas as equities, interest rates or foreign exchange rates.
Their proactivity is a far cry from the more traditional view that the role involves the mere controlling of risk. 'Market risk has sometimes been viewed as purely a control and monitoring function,' says Jonathan Swannell of Alexander Mann Global Markets (AMGM).
'Now senior risk managers work increasingly closely with the businesses that they support, advising - among other things - on how trades are structured, on new product approval and how to reduce large risk concentrations.'
Swannell and other headhunters note that the role of the market risk manager has become more pronounced over the past two years, as equity and other markets have shown almost unprecedented volatility.
A job advertisement for a senior market risk manager in the US demonstrates how wide-ranging the role can be: 'Top-tier securities firm needs risk manager, global responsibility, report to global risk manager, strong fixed income knowledge (commodities and currency as well would be a big plus).'
Extensive product knowledge is also vital. A good understanding of derivatives and other financial instruments is often required: good math always is.
'The background is generally very quantitative, not necessarily PhD but usually MSc,' says Andrew Simpson of Hudson Highland. 'Staff are expected to have studied mathematics or physics and to be very IT literate.'
He says some banks like to hire staff from an accounting background, especially if the role tends towards market risk controller, rather than manager. Others come to the job from a trading background, seeing it as a more stable career and a path into senior management.
So what sort of salary could a well respected and established manager expect? Simpson says a market risk professional at vice president level, who is establishing risk limits for new businesses and periodically reviewing existing limits, as well as setting up and reviewing methodology for risk aggregation, can expect to earn between $100,000-$120,000, with bonuses anywhere between 50% and 125%.
Swannell says total compensation could be as much as $400,000 for those with top level experience - not a poor sum by any means but not one that is expected to rise for the foreseeable future, for the simple reason that good market risk managers are not cheap even now.
'I know of several institutions that would like to build up teams but at the moment feel they cannot afford it,' says Swannell.
Once market conditions improve and financial institutions feel less constrained by their bottom line, the prospects for market risk managers will look very much better.
Figures and commentary supplied by Alexander Mann Global Markets and Hudson Highland
