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Positions in Operational Risk On the Rise

Operational risk remains a focus for trading operations and for good reason. Banks and investment firms say they're worried about repeating the errors of the past. But just where do the operational risk managers and the quants meet, for instance? That's been a serious point of contention.

First, let's make a serious distinction between credit and market risk and operational risk. Operational risk is driven by internal control problems-whether they are system glitches, data accuracy issues or criminal activity. Consider the fat finger errors of late. The rogue trader losses at SocGen also come to mind.

Given the importance of operational risk management, only until recently did those on this side of the shop have any sort of real influence firm-wide. The SEC is certainly a motivator, but there is a serious mood change at firms, as well. So, what's this mean for jobs?

Today, positions in operations risk management are a sure and safe bet and on the rise at all of the major banks and investment firms. Job listings abound. Managers and analysts need a strong knowledge of the operational risk framework, risk mitigation and data management.

Project management experience is a plus, as well as the ability to work across departments from audit to compliance and from tech to trading. Team players need apply. Operational risk managers and analysts need to have a strong understanding of the trade life cycle, as well as the bank's or firm's products.

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AUTHORMyra Thomas Insider Comment
  • Mi
    Mike
    30 May 2011

    I agree with the spirit of the article but let's be careful not to confuse two separate and distinct things. Operational risk management and Operations Risk Management are not the same thing. Operational risk management includes the management of risk in the Operations Department (Operations Risk Management) as well as all other operational risks covering the Front Office (e.g., equities, fixed income, etc.) and other Middle and Back Offices besides Operations (e.g., Technology, Finance, Legal & Compliance, etc.)

  • Gl
    Glenn
    30 May 2011

    What kind of experience/education does one need to get one of these positions?

  • Li
    Lionel
    30 May 2011

    Sounds like a great time to be in Operational Risk, but the downside is that Oprisk only gets airtime after losses have occured.

    When a steady recovery in the economy starts, suddenly the Oprisk report finds itself at the end of the board pack. The SEC and other regulators are big drivers, but there has to be a significant investment - industry wide - in Operational Risk to prove its value beyond producing Red, Amber and Green graphs.

    Perhaps this is the opportunity for Oprisk practitioners - like myself - to move from being green graph authors to managers of quantifiable, plausable, material internal risk & control scenarios.

    Changing culture to make financial organizations more risk conscious has to do with the significance placed by investors, regulators and the boards on: performance measuring the entire organisation based on Operational risk health; from the board to business and fund managers.

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