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6 Key factors impacting investment risk management in 2021

25 / 01 / 2021

From a global pandemic to human rights movements, there were significant changes to the regulatory compliance, governance and risk landscape. The changes seen and remarked upon from 2020 are already having a huge impact on every aspect of risk management in 2021 and will continue to do so for many years to come.

 

Key themes impacting investment risk management for 2021:

1. Movements in risk recruitment

Risk management remains a buoyant market for individuals at all levels. There were at least 25 newly filled Heads of Investment Risk positions in 2020, including internal promotions:

Larger Asset Managers:

Aviva Investors, Columbia Threadneedle, Invesco, Lloyds of London, LGIM, M&G, Man FRM, Man GLG, Abrdn and Vanguard.

Smaller Asset Manager / Funds / Wealth:

FM Capital, FundRock Group, IAM, LGPS, National Pension Service, Nikko Asset Management, Nuveen, Brooks, Principal Global Investors, Smith & Williamson, The Olayan Group, UBP, 24 Asset Management.

2. Hiring from vendors:

Buy side firm infrastructure is still immature compared to the sell side and more often than not, a lot more dynamic. Hiring candidates who consult onsite from Vendors presents excellent value with deep technical knowledge for a fraction of the cost.

Our global team placed 55 risk professionals across the UK and Europe last year, the majority of who were with buy side firms.

3. Risk recruitment and leading remote risk teams

Hiring: It is a first for many organisations to hire candidates without ever meeting them in person. We were pleasantly surprised at how seamless our clients have been at onboarding candidates remotely, however, it is worth noting that a few candidates have declined to proceed in the process without a face-to-face meeting.

Managing: Employers’ trust in their employees have been tested over the last 12 months like never before. What started as a necessity of trustworthiness, autonomy and time management in recruiting during the lockdown has now become a market average and hiring managers are increasingly looking for candidates who are not only ‘self starters’ but also a good remote ‘cultural fit’ and can slot into a remote team.

4. 1st vs 2nd Line of Defence:

Following the creation of first line of defence over the last five years in quite a few firms, we have seen the emerging trend to consolidate back to second line only in a few firms. It will be interesting to see how this develops in the years ahead and which line is preferred.

5. Technical risk management skills: Coding

Historically speaking, the majority of risk professionals were required to have at least a basic understanding of VBA; however, this is no longer sufficient as companies seek to be more agile in their analytical capability. Python is now seen as equally important to the role.

6. Regulatory changes

Liquidity Risk continues to be a focal point for many firms who have sought either to address this on a temporary basis or upskill their own staff and only a few firms having dedicated liquidity risk teams. This is sure to become more popular and dedicated liquidity risk teams will become more predominant.

SFDR: The European Union’s new Sustainable Finance Disclosure Regulation (SFDR) – also known as the Disclosure Regulation – came into effect on 10th March 2021 and many have had to accommodate changes to remain compliant.

Building your risk management team

Barclay Simpson is an international recruitment consultancy that specialises in recruiting professionals for the interrelated disciplines of Governance, namely Risk Management, Resilience, Audit, Compliance, Legal and Treasury.

Our risk team mirrors our clients’ needs by dividing our expertise by discipline; Investment/Market Risk, Operational Risk, Liquidity Risk, Quant Risk and Credit Analytics.

When you’re looking to build and secure your organisation for years to come, Barclay Simpson can help you quickly build a technically proficient risk management function and team.

Get in touch for support in hiring investment risk professionals 

 

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