The Emergence of the Control Function
stakeholders globally. They are now tasked with the
responsibility of ensuring there is constant evaluation
and identification of methods to reduce risk. This job
enrichment has led to blurring of the lines between
risk team in the front offices and the captive centers.
This is clearly manifested in the decreasing gap in pay
between the front offices and the captives. The junior
professional roles have not undergone any change
which is the reason why we witness the same disparity
in compensation, but at the senior management levels
we witness the gap reducing by approximately 30%.
This evolution has been coupled with a change
in the structure of the risk teams as well. The risk
teams are re-aligning themselves into a three tier
structure. The different tiers could be classified as
a. Tier 1 comprises activities which are repetitive and tend
to take place on a monthly, quarterly or annual basis
b. Tier 2 comprises routine activities which would include
defining criteria that determine if a risk has been
managed or a control operated in line with internal
procedures or external compliance regulations
c. Tier 3 comprises collaborative activities that are
aimed at bringing an organizational or group
perspective to these testing and monitoring activities
The risk roles are also evolving and are slowly
moving to the Tier 3 activities, where the risk functions
are acting as an extension of the front office teams
and supporting them in the entire risk management
activities. Global In-house Centers (GICs) across the
board are traversing this journey and are in different
stages of evolution. The existing team sizes have gone
up by 29% and are expected to further increase this year.
This change in the work profile is also accompanied
by a different talent sourcing strategy. Talent
sourcing has evolved from hiring basic graduates
for operational roles to hiring post-graduates and
qualified professionals looking for analytical profiles.
This is manifested in the employee demographics
that we witness across the functions.
What is in it for the Future?
The evolution of talent in the risk function is likely
to continue towards analytics and collaboration. The
adoption of technology and digitization of processes
would lead to the basic functions being automated,
thereby leading to a reduced workforce. The future
talent pool will potentially be trained data scientists
with mathematical and statistical knowledge who
can convert large volumes of data into actionable
insights. As organizations search for the best
candidates for these positions, they will likely find
themselves competing directly with technology firms.
Building cooperative relationships with universities
and financial-technology companies will probably
help banks gain access to this talent. To win these
candidates, the risk function will need to reshape its
employee value proposition and tailor it to these new
recruits. A holistic Total Rewards approach needs to be
adopted to engage with the new and diverse talent.
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