Sometimes lightheartedly referred to as "business prevention units", the role of risk and compliance departments has been thrust into the limelight since the 2008 global financial crisis, which damaged or destroyed high-profile banking and finance institutions.
Amid accusations of ignoring risks, regulatory shortcomings and other contributing factors, a new emphasis has been placed on the need for robust risk and compliance systems. Growing intra-Asia and global cross-border business transactions - plus a greater awareness of the risk of fraud and an international clampdown on money laundering - are also driving demand for risk and compliance professionals.
Recruiters and human resources consultants say the hiring of risk and compliance professionals remains one of the most active areas within the banking and financial services environment.
Martin Cerullo, managing director, development for Asia-Pacific with recruitment firm Alexander Mann Solutions, says candidates with a broad range of skills - such as operations, management reporting and financial control risk reporting - are sought after by banks looking to build or expand their risk management and compliance teams. Also in demand are job-seekers who have strong technical capabilities to build and operate reporting and risk management tools.
Babak Nikzad, partner, financial services consultant with KPMG, says demand from clients for risk and compliance services is mainly driven by strengthened regulation. Because of the financial crisis, which has led to G20 initiatives such as the new Basel III requirements, Nikzad says clients are looking to KPMG to help them implement and structure new compliance measures.
On the mainland, complex rules introduced by insurance regulators are also driving demand for professional financial services. The reforms issued by the China Insurance Regulatory Commission include enterprise risk management requirements that call for greater transparency and data control. At the same time, the requirement for all mainland A-share companies within the next two years to comply with "CSOX" - the mainland governance and financial reporting version of the United States Sarbanes-Oxley Act - is boosting demand for compliance professionals.
Nikzad says that recruiting qualified professionals in risk and compliance has become more of a challenge in the past 18 months, as banks and other financial institutions have embarked on aggressive hiring activities.
In addition to recruiting risk and compliance employees from Asia, KPMG also hires from Europe, the US and South Africa. "Given the current employment market conditions in Asia, we need to look overseas," Nikzad says.
KMPG looks for team-players who can work under pressure, he says. They should also have a clear understanding of client service.
"The people we look for should be articulate and have the confidence and ability to interact with senior client executives," Nikzad says, adding that risk and compliance professionals can be hired from many different academic and career backgrounds.
"We have engineers, former police, and experts in mathematics, and physics professors to people with hands-on experience in manufacturing and internal controls. We also hire about 100 fresh graduates each year from across China to add new blood to the profession."
Depending on their experience and expertise, new employees receive six months of mentoring from a senior manager, often with more than 10 years of experience. They also benefit from the firm's global training programmes.
Eric Chia, Ernst & Young Greater China Risk leader, says risk and compliance issues are driven not only by regulatory requirements but also by demand from investors and the public. "Investors are becoming more concerned about the need for good compliance. There are also higher expectations from the public," Chia says.
On the mainland, Ernst & Young provides compliance and risk services to clients that include multinationals, state-owned enterprises and private firms.
"As compliance issues become more complex, companies need to ensure they do not simply meet compliance standards for compliance's sake, but have mechanisms in place that ensure risk and compliance become part of the culture of the company," Chia says. "One of the biggest challenges we see is how companies need to get everyone on board so that compliance concepts become embedded in the company systems themselves."
To meet the requirements for risk and compliance professionals, Ernst & Young uses a combination of recruitment and internal mobility.
"We hire selectively and tend to look for people with variable backgrounds, with relevant broad-based experience. I would say we usually recruit individuals with practical rather than theoretical experience," Chia says.
Internally, the moves are also selective, he says. "We frequently have people move into risk and compliance from our insurance department and other business functions who are looking for a career chang," Chia says.
"As a firm that always tries to accommodate employees' career development wishes, we believe if people are doing what they enjoy doing, they usually tend to do it better."
A matter of trust
Professional associations and academic institutions work to help fix financial sector’s ethical bearings
Ethical lapses in the banking and finance sector that have been blamed for triggering the global financial crisis have highlighted issues such as trust, integrity and social responsibility.
Without ethics, there can be no integrity in the financial markets, says Ashvin Vibhakar, managing director of Asia-Pacific operations at the CFA Institute.
“It is critical for the economies of the world that not only our members but also everyone within the industry behaves in an ethical way,” he says. Renowned for its rigorous six-hour examinations, the Certified Financial Analyst designation encourages charterholders to uphold the highest standards of ethical behaviour, Vibhakar adds.
“Through our Code of Ethics and Standards of Professional Conduct – the ethical cornerstone of the CFA Institute – our aim is to be the leader in setting ethical standards,” he says. Changes in the financial markets mean finance professionals have an even bigger responsibility to protect their clients. “Long ago, investors were mainly institutional and they understood what they were doing, but these days, there are a large number of retail investors who have little knowledge about the things they are investing in. If responsible finance professionals don’t protect small investors, who will?”
Professor Steven DeKrey, senior associate dean of the HKUST Business School and director of master programmes at the university, says ethics is a topic frequently discussed by students enrolled in the Kellogg- HKUST EMBA programme.
“Our students come from adiverse background of culture, industries and geographical areas,” he says. “As senior managers and Asian leaders, Kellogg-HKUST EMBA students are acutely aware of the ethical challenges facing corporate leaders.” DeKrey says as part of the EMBA programme, students examine leadership in modern organisations with a focus on ethical challenges.
With the new 3-3-4 academic structure for Hong Kong’s schools and universities in place, Leonard Cheng Kwok-hon, chair professor and dean at the HKUST School of Business and Management, says the university is planning to launch a new undergraduate course focusing on the understanding and promotion of ethics and social responsibility, largely in response to demand and support from business.