Contract recruitment in risk and quants

After a relatively quiet 2024, the risk contract recruitment market has begun to stir back to life in recent months, with a clear uptick in both fixed-term contracts (FTCs) and day-rate roles. Whether this rebound reflects a broader shift in hiring appetite or simply a short-term response to resourcing pressures remains to be seen.

However, an increase in activity is nonetheless encouraging in a contract market that has struggled to gain momentum in recent years. One explanation is that firms remain hesitant to commit to permanent hires in the current economic and political climate. Indeed, when employers were asked for the primary reason why they use interim resource, 14% said they wanted to keep permanent headcounts low.

Nevertheless, project work remains the top reason firms turn to interim resource, accounting for 36% of contract hiring in 2024. This was followed by cover for absences (27%), while other reasons include difficulty sourcing permanent employees (9%) and the need to leverage subject matter expertise (9%).

“We’ve seen a marked increase in contract activity this year, although caution continues to be an underlying theme and most hires are being approved on a case-by-case basis,” says Tamryn George, Principal Consultant at Barclay Simpson.

“Engaging contractors offers flexibility at a time when budget scrutiny remains high and many teams are still working through the aftermath of internal restructures.”

It is worth noting that while a quarter of contractors we polled are currently on FTCs – and this number is rising – this is the least favoured type of interim work arrangement. Only 15% of candidates said an FTC is their preferred set-up, while 40% prefer ‘inside IR35’ day-rate positions.

On the topic of IR35, the off-payroll reforms continue to have an impact on risk and quants contract recruitment, although our data suggests employers and candidates are adapting to the changes.

In our 2024 Risk and Quants Salary Survey, 60% of organisations said IR35 reforms had affected their ability to source a desired contractor within the last year, 13% of which said the impact had been ‘significant’. Today, 39% of employers say they are still being affected, but none reported major difficulties.

Most cited day rate for risk and quants contractors in 2024

£900-£999

Among contractors themselves, the most common response to the reforms has been to increase their day rates for ‘inside IR35’ roles (40%). However, more than a third (35%) said they had either sought or accepted permanent roles because of a lack of contract opportunities, which could have long-term ramifications for the supply of skilled professionals in the contracting market.

Key 2025 trends in risk and quants

Various political, economic and social forces are shaping the risk management and quants job markets in ways that affect recruitment. Here, we take a closer look at the trends driving demand today and the factors that could influence hiring in the future.

Artificial intelligence gains momentum

In January, the UK government announced it will “turbocharge AI” as part of plans to boost productivity, attract foreign investment and create new jobs. But even without this push, AI has already been making waves across industries nationwide.

Currently, three-quarters of financial services firms in the UK are using AI, and a further 10% intend to within the next three years, according to Bank of England (BoE) figures. Separate research from Grant Thornton shows that AI and machine learning are the top investment priorities for CFOs in banking and asset management firms.

75% of financial services firms in the UK are using AI

Source: Bank of England 

Within risk management specifically, the potential for Al deployment is vast, ranging from retail fraud detection through to trader conduct monitoring and complex modelling. Last month, the BoE claimed greater use of artificial intelligence may also strengthen financial market resilience overall.

“AI could enhance risk management by enabling better use of available data, meaning that [a] fire-sale scenario – where leveraged firms are caught out by price moves – becomes less likely or has less of an impact,” the bank stated.

Indeed, Al and machine learning technologies are already extensively used in risk functions, most notably in less complex, low-value and high-volume tasks, such as retail credit processing and flow commercial credit applications.

While some people currently employed in these areas are being replaced by automation, Al deployment also creates new risk jobs due to oversight and governance issues. This is leading to roles that extend the concept of model validation to model and Al governance, as it becomes necessary to determine how, why and where Al can be utilised, as well as how its use in the business is being monitored and governed.

New regulations

Regulations are a key driver of risk and quants hiring, and a number of regulatory developments are on the horizon in 2025 and beyond.

After multiple delays, Basel 3.1 is due to be implemented in the UK on January 1 2027. The Bank of England said this would enable the industry to see how the framework is being implemented in the US under the Trump administration, after major American banks have pushed back against the reforms. If the rules are implemented as intended, we expect a notable increase in demand for credit risk modellers and related quant jobs over the next 18 months.

Also within model risk management, the SS 1/23 regulation has now been in force for over a year, and all banks in scope are expected to ensure their compliance. In reality, there is still work to be done and there remain people and skills gaps in firms. AI model risk is a particularly challenging area, as model risk is becoming responsible for overarching AI governance at many organisations.

As such, existing model risk managers are being retrained and re-tooled to be able to effectively manage AI model risk. This is more challenging when LLMs (large language models) are involved, and we expect continued specialist hiring in this space.

Indeed, AI creates a number of challenges that risk teams must address, including data privacy issues, cyber security threats and AI bias. While the UK currently has no statutory regulations surrounding AI, the EU Artificial Intelligence Act went into force in August 2024 and UK firms must comply if they operate in the EU or engage with its citizens.

Elsewhere, the FCA has released its findings from a survey exploring culture and non-financial misconduct at more than 1,000 financial services firms. The results showed a sharp rise in non-financial misconduct – such as bullying, harassment and discrimination – from 1,363 incidents in 2021 to 2,347 in 2023. The increase may be due to problematic behaviour becoming more prevalent, but it could also signal that employees are starting to feel more comfortable speaking up.

Either way, the FCA is releasing a long-awaited policy statement on non-financial misconduct later this year. It is likely to emphasise the importance of addressing conduct-related risks and complying with human rights legislation, the Equality Act and whistleblowing requirements.

Climate risk reset on the horizon?

A few years ago, climate risk was one of the hottest topics in risk management. This initial enthusiasm had begun to die down recently, with many organisations scaling back their sustainability pledges.

A recent report showed that corporate support for ESG proposals hit record lows in 2024, driven by cooling sentiment among US investors. ShareAction figures showed that less than 2% of shareholder proposals on ESG received majority support from asset managers last year, a significant drop from 21% in 2021.

62% of UK large businesses are concerned about ESG-related litigation

Source: Gallagher

Within UK-based risk functions, the rise of ESG hasn’t been as much of a driver of new hiring as initially expected. While it remains a key consideration, many firms absorbed ESG into existing risk roles rather than building out standalone teams. Dedicated climate risk jobs exist, but are relatively rare, with risk professionals typically undertaking training or upskilling to incorporate ESG skills into their broader remit.

However, this could be set to change, as the PRA launched a consultation in April 2025 to enhance banks’ and insurers’ approaches to managing climate-related risks. The regulator said firms are not going far enough in how they integrate climate risk into their core risk management, governance and planning. It initially outlined its expectations of firms in 2019, but stated that progress has since been “uneven” and that many banks’ climate risk frameworks remain in their infancy.

From a recruitment perspective, we do not expect the PRA’s consultation to spark a huge hiring surge in the near future, but it could drive targeted demand for climate risk specialists, particularly among firms still building internal capability.

Diversity in risk and quants recruitment

At Barclay Simpson, we are committed to building diverse and inclusive workplaces where everyone’s contributions are respected and valued. Recruiters are in a unique position to promote the benefits of equality, diversity and inclusion (EDI) within the world of employment, and we believe agencies should not only embrace these values internally, but also promote and support them across their wider communities.

In this, our 2025 Risk and Quants guide, we will for the first time be publishing additional diversity-focused data gained from our annual salary surveys in order to provide greater insight into employers’ and candidates’ perspectives on EDI. We intend to follow these trends year on year to track the progress and evolution of policies and attitudes in the workplace.

FCA abandons new diversity rules

In 2023, the PRA and FCA published new proposals to improve diversity and inclusion within the financial services sector. A consultation period lasted until the end of that year, and its final rules were set to be unveiled in early 2025.

However, in March, the regulators announced the new regulations would not be going ahead, due partly to the government’s own efforts to strengthen ethnicity and disability pay reporting for all large organisations in the UK.

This is a disappointing development, as we believe a greater focus on EDI would be welcomed by both employers and professionals. Our data shows that 82% of candidates see equality, diversity and inclusion as important to them personally. Of these, 39% say it is ‘very’ important.

Salary and bonus trends

The post-pandemic boom in hiring across risk management and quants teams led to significant salary growth in 2021 and the first half of 2022. However, such unprecedented growth was never likely to last, and starting salaries have since increased at a steadier pace – occasionally even dipping.

Many firms are now reverting to the middle of their salary bandings for roles rather than pushing to the top end. This recalibration has been particularly visible in mid-level hiring, where we’re seeing a noticeable compression effect.

“Salaries for junior candidates, especially those with strong technical skills, remain elevated, while Heads of Risk roles continue to attract a premium,” says Jon Muqolli, Senior Consultant at Barclay Simpson.

“Unfortunately, the upper-middle bracket has come under pressure, with employers less willing to stretch budgets for their desired candidates. In some cases, firms are actively restructuring to cut high-cost senior staff and consolidate leadership layers.”

Our salary survey data reflects the cooling effect that our consultants are seeing on the ground. While most employers (96%) plan to raise base salaries in 2025, only 13% expect to hike pay by 5% or more, with the vast majority opting for more modest increases or none at all.

Bonus expectations are equally restrained. Nearly half of employers (48%) expect bonus levels to remain roughly the same year on year, with only 13% committing to increases.

Outside of the UK, salary trends have remained flat across many European markets. In Luxembourg, for instance, salaries were adjusted in line with inflation, but candidate priorities have shifted, with a growing focus on job security, hybrid working flexibility and quality of life.

Scandinavian roles are increasingly attractive on these terms, offering similar compensation to other European financial centres, but with a stronger work-life balance and other lifestyle benefits.

Candidates’ expectations evolving

Remuneration remains the leading motivator for candidates considering a move, with 60% citing better pay as their top reason — up slightly from 57% in our 2024 report. Career development ranked second at 19%, down from 23% last year.

However, the most significant shift has been the rise of job security as a concern. Just 4% of respondents listed it as their top reason for considering a move in 2024; this year, the figure has more than doubled to 9%. While rising from a low base, the change clearly indicates a growing undercurrent of caution in a market still adjusting to rounds of restructuring and hiring freezes.

Job security has now surpassed both a better work-life balance (8%) and remote working (4%) as a priority for professionals seeking new roles. That said, there are differing views between risk disciplines – 11% of operational and enterprise risk professionals prioritised job security, which is higher than average, while no quants professionals listed it as their top concern.

Flexible working continues to appeal to candidates, but people are less rigid in their expectations than a year ago. In 2024, 72% of candidates said they would consider changing jobs if they were not allowed the hybrid working set-up they wanted, but this figure has since fallen to 65%. This is perhaps unsurprising in an employer-led market where competition among candidates is fierce.

As a result, candidates are increasingly open to four or even five days on-site if the role is attractive enough, even though many professionals still prefer a hybrid model of two to three days working from home. Quant jobs tend to buck the trend here, as demand for skilled talent remains quite high, giving professionals greater room for negotiation on flexible working.

On the topic of job benefits, annual bonuses are the most valued part of wider remuneration packages for 68% of professionals. By comparison, remote working and flexible working come a distant second and third (15% and 11%, respectively).