Risk in its various forms - whether in business, banking or investing - is a fact of life. However, following the widespread impact of the global economic financial crisis and controversy over the selling of Lehman Brothers minibonds in Hong Kong, risk management has become a major focus for the banking industry.
Recruitment firms report that across the banking and finance sector, experienced professionals who can identify and understand the circumstances that lead to risk, and formulate solutions to mitigate risk are in hot demand.
Speaking at a 'Basel III: New Rules for Bankers' seminar, co-organised by Classified Post and Kornerstone, Peter Lam, director, risk and compliance services, KPMG, said new international banking regulations are part of continuing efforts to address bank supervisory issues and enhance banking practices.
He said Basel III regulations should reduce banks' incentive to take excessive risks, lower the likelihood and severity of future crises, and enable banks to withstand, without government financial intervention, the type of stresses associated with the recent financial crisis.
Lam said that to meet Basel III compliance, banks must invest in risk reporting systems, information technology (IT) infrastructure and human resources to build up a sound risk management platform.
'Banks need to strengthen the preparation of a plan to incorporate all risks. This requires across-the-bank co-operation involving senior management, finance, treasury, business, and risk departments,' he said.
Emma Charnock, regional director of Hays in Hong Kong and China, says that due to business expansion and the lessons learned from the financial crisis, regulators and banks are placing additional focus on risk monitoring and internal control. Consequently, demand has risen for candidates in credit risk, market risk, operational risk control and internal audit, with attractive remuneration packages provided.
'This is an area where we see constant demand,' Charnock says. 'We have seen some consolidation following the extremely high volumes of hiring activity last year, but risk and compliance remain robust recruitment areas.'
In the banking sector, risk professionals have the responsibility to make sure a bank avoids becoming overexposed to volatile stock markets, regulatory violations, or other financial pressures that could challenge the strength of its balance sheet. In asset management and investment banking, risk management helps ensure the overall health of a firm's portfolio and regulatory risk.
Since many Hong Kong banks became embroiled in Lehman Brothers-linked financial products, which saw many clients lose huge sums of money, efforts have been made to restore customer loyalty. Regulators now insist the investment and regular banking areas within banks are clearly marked and kept separate.
This has led to competition for front-of-house relationship managers. Particularly sought after are those with regulatory approved licences to sell investment products. Ideal candidates are often recruited from the insurance industry or other banks.
In a move that some within the industry believe is another effort to restore customer loyalty, the Hong Kong Association of Banks, which includes HSBC and Standard Chartered, has agreed to a government plan to buy back at market prices the minibonds that were sold to the public and guaranteed by Lehman Brothers. DBS (Hong Kong) has agreed to make the payments to clients it classified as having a low or medium investment risk profile.
Concerns about investment risk have also created job opportunities for professionals in the private banking sector. 'There has been a flight to security and quality by both investors and people working within the industry,' says Enid Yip, CEO, Asia, Bank Sarasin.
She says advisers and seasoned bankers have the same concerns as clients. 'They are drawn to where they can best use their talents - to safe, secure and stable homes for their clients,' Yip says.
She adds that the Swiss bank's Asian business is growing rapidly. However, the focus remains firmly on sustainability and delivering services from a position of strength. Yip believes in order to deliver customer-focused services, recruitment activities should be carefully measured, and kept in line with balanced growth.
'We have a long-term growth strategy,' she says. 'But having said this, we may be the only private bank that has not announced we are going to hire hundreds of relationship managers over the next one to three years.
'The most important aspect is client satisfaction, not the number of relationship managers sitting at desks. I believe it is possible to maintain a strong business position providing you maintain deep relationships with clients. We intend to do this by being home to some of Asia's most respected and seasoned private bankers.'
Ashvin Vibhakar, managing director, Asia Pacific Operations, CFA Institute, believes training programmes that reinforce the necessity for integrity and ethics are crucial for instilling awareness concerning risk.
'Risk can involve many different areas, from negligence to lack of education and awareness, to systems that have not been properly established to monitor and identify risk,' Vibhakar says.
He adds that each year, CFA charter holders sign a pledge to adhere to a strict code of ethics and standards governing their professional conduct. 'Charter holders are trained to always put the needs of their clients first,' he says. 'When this happens, it is far less likely there will be problems.'
The CFA designation is recognised as one of the most challenging and respected qualifications within the financial services field. CFA holders also benefit from the ability to work in different parts of the world as the qualification is internationally recognised.
Worldwide, the CFA Institute has nearly 100,000 members, including about 4,200 fully qualified CFA charter holders in Hong Kong.
'Firms that hire charter holders know the designation signifies not only subject-area competence, but also a dedication to knowledge, professional expertise, and high ethical standards,' Vibhakar says.