The risk manager is often the last line of defense between eager loan officers, traders, and possible losses. The industry has had a challenging few years as many risk management tools and measures failed to identify the massive losses and the potential financial collapse that the subprime mortgage crisis caused for many banks and financial institutions. As banks, accounting firms, the government, and consulting firms beef up their risk management capabilities in response to these problems, the industry will developing new methods and systems to avoid system-wide failure in the credit markets.

For those of you who are new to risk management, risk management professionals assess the risk posed to an institution’s safety as well as the solvency of different financial instruments, lending facilities and company-wide systems. In the world of finance, risk management mirrors the business-line side by attempting to visualize and limit the potential risks associated with utilizing assets to drive growth. While firms that call themselves risk management companies often do much more than financial risk management, risk management departments can be found in almost all finance companies.

WHERE THE ACTION IS

Subprime mortgage meltdowns aside, 2008/2009 came with the usual litany of relatively commonplace catastrophes, a day in the life for risk management professionals. Loan defaults and workout liquidation scenarios will always be a part of the game. Risk will always be out there.

All this means more opportunity in the risk management job market. Major accounting firms, insurance firms, banks, trading exchanges, and government institutions like the U.S. Treasury department are hiring risk management professionals, partially in response to breakdowns on the part of the current risk management apparatus and partially in response to new government regulations that standardize measurement of probability of default. There are jobs on offer from firms like CME Group Inc., General Electric Capital Corp., and JPMorgan Chase & Co., among many others.

Hours should still be flexible enough to permit risk managers to get an executive MBA while working; intuition and risk-averse thinking will still be rewarded; and strong performers will still see offers to transition to the business line-side.

CAREER PATHS

Risk management is often thought of as a finishing school for promising young bucks in the finance world who eventually want to work on the sales and buy sides of the business. The more intuitive and risk-averse underwriters—often those who have spent time on the business line side—go on to become senior risk management professionals. 

If you’re thinking about jumping into risk management, first take a look at your educational credentials. Here are some typical undergraduate/graduate degrees that are helpful for risk management professionals:

- Finance

- Accounting

- Mathematics

- Computer programming

- Complex systems

- Statistics

And here are some typical careers paths that you might be able to follow:

Level 1 risk manager to Level 2 risk manager to Executive MBA to Level 2 trader

Level 1 risk manager to Level 1 trader to Level 2 trader to senior risk manager

Level 1 risk manager to Level 2 analyst (buy side)

Spend some time in risk management and you’ll see that you are better prepared for the inevitable cash-rich economy of the future than candidates who have spent time in other finance verticals. While there, enjoy the relatively sane hours (40-50 a week for junior underwriter, and 50-60 hours a week for more senior professionals), the learning process and the future career mobility that you’ll enjoy. Don’t worry about the relative lack of glitz and glamour that you might get at an I-bank, for instance; after all, a lot of those places are a bit less glitzy these days.

GETTING THE JOB

“Understand the market you’re living in,” one ambitious, rising risk management professional says, “and how that relates to the institution you’re applying at.” When the hiring manager at a bank with distressed assets hears from you that you’ve worked on several liquidation scenarios, you’ve got an edge over underwriters who haven’t seen as much carnage. On the other hand, if you are talking to a cash-rich bank, it would be better to discuss how you’ve helped deploy a portfolio not overly leveraged in toxic real estate assets.

Either way, look for a relatively robust job market in the near term.