Introduction

To a certain extent, it can be stated that the weight the opinion of the risk manager carries has increased of late. However, at some banks, traders are still able to execute unauthorised trades in pursuit of higher revenues, resulting in the risk managers’ engagement with the legal department. This is an example of a more extreme scenario, and at each bank there will be a somewhat different culture and/or ethos. Moreover, the relationship with the traders will depend on a number of different factors; one such factor being the proximity between the risk manager and the trader.

Key findings

• Location of Risk Employees – It should be noted that there was a common approach across the interviewed sample. All of the participants indicated that there is somewhat of a combined approach, and risk managers tend to be located both on the trading floor and away from it on other floors in the building.
• Seniority of Employees – All of the banks acknowledged that the level of seniority on the trading floor varies and there are both senior and junior people that are currently located there.
• Consistency – Banks should aim to develop, implement and maximise consistency, taking into account specific regional or jurisdictional anomalies and/or requirements.

Conclusion

The location of the risk managers will vary and depend on a number of different factors. One of the main issues is space and the amount of people already on the trading floor.

All of the banks spoken to have market risk managers situated on and off the trading floor. In addition, there is a combination of senior and junior personnel. On average, the banks are more focused on policing the front office and serving the board and the regulatory body than assisting the front office. This is somewhat expected given the increase in different proposals and directives from the regulators around the world. 

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