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The financial services industry is undergoing complex changes due to the new norms and regulations and strict enforcement actions. The transformation in the industry, which comes along with new risks arising from volatile financial markets and cyber threats, is encouraging firms to hire more number of risk managers.

Susan Palm, who had previously served as the head of audit, compliance and operational risk team at both global and regional community banks, said that presently there is massive shortage of risk managers in the industry.

Senior executives say that their risk management job postings receive very few responses, while adding that the candidates who do apply often lack the required skills or qualifications. To support Susan’s claims, results of the 2013 study by Accenture, titled – Global Risk Management Study – can be analysed. The company surveyed 446 risk executives from organizations across several industries, including banking and insurance.

The vast majority of all respondents (98%) reported an increase in the perceived importance of risk management at their organizations compared to two years before. However, it was found that there is a huge difference in the demand and supply: 54% of executives said they face a shortage of candidates with the right skills for risk management. The biggest talent shortages are for risk business and data analysts (61%), risk technologists (60%) and regulatory change program managers (58%).

Lack of proper Risk Management certification

Susan Palm noted that one of the biggest reason for the talent shortage is that higher education has not yet caught up to the new demand for risk management professionals. Presently, very few universities have graduate programs that emphasize risk management.

The banking professional further said that one reason for the crisis could be the lack of proper formal programs that certify risk professionals. Programs similar to other examinations and certifications for financial professionals and information security experts, which include the Chartered Financial Analyst, Chief Information Security Officer examinations and Certified IRA Services Professional, need to be introduced to deal with the situation.

Analysts have opined that in order to encourage more people to acquire the necessary skills and expertise in risk management, more comprehensive certification and training programs need to be put in practise. The financial services firms can also supplement these programs with internal talent development courses for risk professionals.

Inadequate compensation

Salaries for compliance professionals are also lagging behind demand. Talking about the case of risk managers who have the required skills to perform the job efficiently, firms have trouble hiring them because the payout they offer is inadequate. One reason could be that banks are unaccustomed to creating compensation packages that incentivise good risk management.

Traditional salaries and bonuses are targeted at rewarding employees that engage in revenue-generating activities that involve some amount of risk-taking. However, in case of risk managers, whose job is to limit or manage risk-taking, it gets hard for the firm to quantify rewards.