Articles - Interims fill the Risk gap

Regulatory changes introduced by the Financial Services Authority such as Solvency II, Basel III and RDR has created a strong demand for high calibre professionals experienced in business-change and risk management. However, this has led to a skills shortage in key areas and interim managers are currently in high demand in areas such as programme and project management and implementation.

In fact, according to new research from Green Park Interim and Executive Search, this is one of the fasted growth area for interim managers in financial services as a means of meeting the talent short for individuals with the necessary skills.

 By Raj Tulsiani CEO, Green Park

 There’s no question that the global downturn has had a material impact on recruitment within Financial Services. In the last two years, permanent hiring has almost reached a standstill, as organisations retrench, re-structure and ‘streamline’ their workforces. However, there are pockets of the sector that have still been compelled to import new talent, often to deal with newly imposed Financial Services Authority (FSA) legislations, or forthcoming regulatory deadlines that pose significant challenges. Solvency II, Basel III and RDR are all looming, and with so many ‘hiring freezes’ across the sector, short term specialists – interim managers - are increasingly in demand. Solvency II, in particular, looms large for the insurance side of Financial Services, comprising a fundamental overhaul of capital adequacy standards for the sector. Those requirements are effectively ‘extra’ work for organisations that are already stretched to capacity as they cope with the extremely challenging economy, and there simply isn’t the internal talent pool to cover the implementation.

 With the increased focus on risk mitigation, Actuaries are in short supply, and consequently competition for their services – on an interim basis, in particular – is fierce. For example, as Solvency II goes through the gears from scoping to implementation, interim management has presented a flexible – and close to immediate – solution within programme teams. Solvency II implementation requires close collaboration between finance, risk and actuarial functions, but the nature of the project means permanent teams might not be the best way to cope with the extra workload. In fact, there are situations where entire Solvency II teams are comprised of interim managers, from Actuarial Programme Directors at Executive Board level through to Project Managers administrating a small corner of the programme. While the interim solution has benefits in terms of keeping permanent workforces streamlined in a challenging financial climate, it is also aligns well to the ‘phased’ nature of Solvency II implementation. Actuarial interims of different skill sets can be imported for each stage of the programme, and of course interims that have completed contributing to their part of the programme don’t remain on the payroll any longer than they need to.

 Financial Services has always been a stronghold for interim management, but, more recently, the economy, increased regulation and a move away from costly management consultancy have boosted relative demand compared to other sectors. Actuarial, Compliance, Audit, and Risk roles have seen increases in volume, much of which can be attributed to the FSA cracking the whip in the face of severely ailing economy blamed (fairly or unfairly, depending on your stance) on an industry seen to be cavalier in approach and attitude. In fact, our recent survey of the Financial Services interim space indicated nearly a quarter of respondents are engaged in Actuarial, Compliance, Audit, and Risk or Solvency II roles: roles pivotal to ensuring the forward progress of the industry is underpinned by caution and rigour. It’s a trend that looks set to continue, with new financial standards, more conservative approaches to risk management, and additional reporting requirements appearing to be the way of the future. Actuaries very often have such specialist skill sets that they might not make good ‘permanent hire’ potential – the economy is changing so fast that an interim solution is often the most appropriate and prudent course. In the last 12 months, we’ve placed more than a dozen actuarial interims, ranging from Programme Directors to Project Managers – most of who are slotting into Solvency II implementations.

 From a recruitment perspective, interim management in Financial Services looks healthy, particularly across the Finance, Risk and Actuarial functions, where legislation and the new climate of caution are driving hiring. There is still a great deal of uncertainty in the economic environment, but Actuarial specialists are arguably some of the most ‘in demand’ professionals – and that trend looks set to continue.