Staying ahead of the game - safeguarding for the future

Deem NaPattaloong our consultant managing the role

Looking forward to the end of the year, it is unfortunate to state that the Covid crisis is still a huge part of our lives, and with this comes the expanding impact on the global economy. True, a few sectors have done well under lockdown conditions but they have been the exception. It has been suggested that by the time this crisis is over, it could, through the destruction of the economy, cause much more harm to the financial system than the 2007 financial crisis, with talk of a V-shape recovery becoming muted. The future is somewhat unknown, and with no vaccine, the virus will continue to change the world we know.

The financial sector

One particular sector which has weathered the storm is banks and other financial intermediaries. They did this by being quick to react and adjust to the new business environment. An environment that requires more attention to liquidity management, conducting business over a long distance, and offering more time and support to their clients.

However, the real test will come when the debt moratorium ends. Banks will need to have a clear picture of the outlook of their clients and their new risk profile. "


Brexit in the background

There is also no forgetting Brexit, rearing its head in the background of the pandemic. While we wait for a negotiated deal, the outlook is still concerning, as things will not be the same for most businesses moving forward. A new normal and a new kind of relationship with the EU requires a full-scale reassessment of risk. Banks and other financial intermediaries will need to upgrade their risk management systems, just like they did post the 2007 financial crisis. Like before, banks that stay ahead of the game will emerge as clear winners. 

Safeguarding for the future

  • Risk - when the ceiling has been lowered on the revenue front, it makes sense for banks to focus their attention on risk, and to put in more efforts to minimise foreseeable loss. Among other things, banks will want to recalibrate their credit risk models, taking into account the varied impact of Covid on all the economic sectors.
  • Credit quality - financial institutions will need to reassess the credit quality of their clients after they emerge from the crisis; paying particular attention to those in sectors that had been more exposed to the fall out. New data and assumptions will have to be incorporated into the model in order to determine EBITDA, free cash flow and costs.
  • Technology - This will, of course, play an important role in risk management. Banks will employ new technologies to help manage operational risk, credit risk as well as market risk. If the 2007 crisis is any indication of things to come, a lot of hard work will have to be put into the management of credit and operational risks, employing new technologies to monitor banking operations, review data and reconfigure risk models.

Talent insight

For now and for a long time to come, talented risk managers and professionals are what banks will continually need - people with the right set of skills and experience. Unfortunately, the talent pool of risk managers has not been expanding in line with the new demand.

Over the past decade as regulatory demands were on the rise, becoming increasingly more complex, no meaningful efforts were made to attract more talented people into the field of risk management. This has led to a shortage of skilled risk managers even before the emergence of the pandemic. Given the urgency of our current climate banks will not have the time to train people and will need to recruit. This is where we come in, if you're a professional within risk, please get in touch now.

16/10/20
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2020 has been an unexpected year across the world, and it has been crucial to monitor and deal with all the effects of the Covid pandemic in business and in our personal lives. Amidst this crisis we have also had the uncertainty surrounding Brexit looming over us, which has left many businesses trying to deal with the immediate challenges to society and the economy at large. The effects of both have been felt, and we can see this within the jobs market.   As experts within specialist markets we have been privy to fluctuations within specific industries. Below are some of our observations across the market.Custom and duties tax specialists We have seen an increase in activity and growth across custom and duties tax specialists for large import/export FTSE businesses. Particularly businesses are looking for candidates on an interim basis to make sure effective processes and controls are implemented. This is an evolving space and once we have further clarity we expect demand to increase. In the last 6 months, we’ve seen an increase in recruitment activity from businesses in industries such as food manufacturing and FMCG that have had an increased demand for their products on the back of lockdown. In addition to this, businesses that do a significant amount of importing and exporting see customs and duty as a key area of focus with Brexit looming, and we have advised and recruited for several clients who have required specialist knowledge. This is a niche skill set that can be provided at premium rates by consultancy firms, but there is a recent trend to bring this expertise in house. The cost of doing this would be in the region of £40-50k for a perm hire and c£250 per day for a temp hire - watch this space if you're a candidate within this market.  Audit and riskAudit and risk have also experienced an increase in resource on both the temporary and permanent markets. As organisations seek to learn effectiveness lessons from the crisis they require resource to conduct and undertake Covid specific reviews. In addition, the offering of flexible working arrangements also provides a great opportunity to test network capabilities as well as controls across user access, disaster recovery, business continuity, as well as high level IT controls testing to ensure remote working does not compromise the risk appetite of the business. Start ups Over the past 6-12 months we have also undertaken a number of start up engagements, helping businesses recruit permanent heads of department to develop strategy internally. This is a trend we expect to continue as businesses look to cut spend on consultancy fees and take ownership of these disciplines, ensuring a consistent level of quality and cost efficiency.  To view more of our live roles, visit our job search page.

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Amidst this crisis we have also had the uncertainty surrounding Brexit looming over us, which has left many businesses trying to deal with the immediate challenges to society and the economy at large.

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David Clamp

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FX volatility | The bottom line, a guide by Western Union Business Solutions
FX volatility | The bottom line, a guide by Western Union Business Solutions

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Financial Services

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General

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From Brexit to international trade tensions, recent economic turbulence has highlighted one thing more clearly than ever: risk management strategies have to be in place to protect profits for businesses trading internationally. If you are an FD or fund manager; many hours of expertise are poured into choosing the right opportunities and tracking yields, but if there is an international element to the investment, even a small change in the currency exchange rate can have a significant effect on profit or the value of returns. With currency rates fluctuating up to five percent in a month last year, volatility is a real threat to any international business transaction. Five percent profit or gains in an investment are hard earned, and can be quickly lost with an unfortunate turn in the exchange rates. The uncertainty exacerbated by Brexit has caused hesitancy to purchase currency with a “wait and see” approach; dealing all FX on spot with their incumbent banking provider. But large swings in rates means that currency volatility and pricing have become higher on the agenda for many; highlighting the need to get the best from a reputable provider. Working to develop strategies based on the unique needs of a business or the requirements of each fund means budgeted levels can be set and protected. If you are trading internationally, you may want to speak to a qualified risk management consultant to consider the following steps: Understand your exposures Businesses could struggle to manage currency risk without understanding where exposures exist and reviewing what they currently do to protect themselves from volatility. Start by assessing your goals, risk appetite, and tolerance to volatility. Is there a budgeted level which is used for accounting purposes? Consider, for example, credit needs and payment requirements such as cost of transfers, bulk payments or international routing. Create a strategy With an understanding of your objectives, you have the power to start making informed decisions. Identify some goals specific to managing currency risk. These could include defining a target exchange rate for some, or all your exposure. Consider establishing a formal risk management policy to define processes. Select the right risk management tools for your business remembering that one size does not fit all. Tactics and execution Once the most appropriate tools have been selected, applying the right trading tactics can mean the difference between success and failure. For a lot of businesses, the strongest strategies often recognise a framework for executing trades at favourable levels while protecting against material risks. It may also be important to review the market and identify recent trading patterns to understand the risks and opportunities available. Evaluate and adapt your strategy Just because a policy has been in place for a long time does not necessarily mean it is still relevant in the current market conditions. Monitor your strategy and consider adapting it to identify shortfalls and build on success. Use a platform which can provide thorough and detailed reporting to assist your decision making. As a provider of cross-currency, cross border payments around the world, Western Union Business Solutions (WUBS) recognises that for a lot of our clients, foreign exchange volatility should be limited as a risk factor. WUBS can offer products which match your strategic currency objectives depending on the needs of your business. In addition, we offer competitive spot rates, optimal routing and cost effective transfers. Our globally leading online platform not only facilitates online payments and bulk upload but can also give real time access to positions and mark to market valuations. Our 10th edition of our highly regarded Market Insight Report represents the views of over 1,100 professionals, and contains insights from our specialist consultants and key business partners on market and employment trends. If you’re looking to find out more on salary benchmarking and the motivations driving the modern workforce today, download our full report which contains key contributions from Seddons Solicitors, Women in Fund Finance, Intoo UK & Ireland and Breaking the Silence.

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From Brexit to international trade tensions, recent economic turbulence has highlighted one thing more clearly than ever: risk management strategies have to be in place to protect profits for businesses trading internationally.

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David Harvey

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Financial Services | Risk 2018 Market Insights in London
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Financial Services

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Market Insight Reports

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View London risk market salaries within financial services. Download the full London Financial Services 2018 Market Insight Report here » RISK  Job title    Salary range   Day rate   Quantitative Analyst | 1 - 3 years exp £35,000 - £50,000 £200 - £300   Market Risk Analyst | 1 - 3 years exp £30,000 - £45,000 £175 - £275  Credit Risk Analyst | 1 - 3 years exp £30,000 - £45,000 £175 - £275  Liquidity Risk Analyst |1 - 3 years exp £35,000 - £45,000 £175 - £275  Quantitative Analysis | 4 - 7 years exp £45,000 - £85,000  £300 - £550  Market Risk | 4 - 7 years exp £40,000 - £70,000 £300 - £450  Credit Risk | 4 - 7 years exp £40,000 - £75,000 £300 - £450  Liquidity Risk | 4 - 7 years exp £45,000 - £75,000  £350 - £500  Quantitative Analysis Manager/Director £80,000 - £120,000  £500 - £750  Market Risk Manager/Director £60,000 - £100,000  £350 - £700   Credit Risk Manager/Director £65,000 - £100,000 £350 - £700  Liquidity Risk Manager/Director £70,000 - £110,000 £500 - £750  Head of Risk  £110,000 - £150,000 £700 - £1,000  Chief Risk Officer £150,000+ £1,000+   View salaries in other sectors within London financial services »  

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View London risk market salaries within financial services.

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Nicholas Georgiou

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