corporate governance recruitment market report 2016 risk ...the risk management recruitment market....

Corporate Governance Recruitment

Market Report 2016Risk Management

Welcome to Barclay Simpson’s 2016 Risk Management Market ReportBarclay Simpson has been producing corporate governance market reports since 1990. We produce two reports each year. This one, summarizing and analysing recruitment trends in the risk management recruitment market, includes an employer survey. Later in the year we will produce our compensation and market trends report, which will focus primarily on remuneration and will again include a survey of risk managers registered with Barclay Simpson. Comparable reports exist for all other areas of corporate governance. They can be accessed in section 7 of this report (“About Barclay Simpson”) or at www.barclaysimpson.com

We place great value on the professional reaction to our reports and would appreciate your comments and any further requests for clarification or information.

BARCLAY SIMPSONMARKET REPORT

2016RISK MANAGEMENT

01/ ExECuTIvE SuMMARY /202/ MARKET ANALYSIS /303/ MARKET COMMENTARY /404/ SECTOR ANALYSIS /505/ SALARY GuIDE /806/ EMPLOYER SuRvEY /1107/ ABOuT BARCLAY SIMPSON /22

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DisciplinesInternal AuditRiskComplianceSecurity & ResilienceLegalTreasury

CONTENTS

1

Risk recruitment market slows

The uK economy presently employs 500,000 more people than it did a year ago and the financial services industry has contributed to this increase. unemployment is at a 10 year low and at levels last achieved before the financial crisis. Productivity and business investment are also finally increasing, as the scarcity of workers focuses companies on how to use them more effectively. Given the risk recruitment market does not operate in a vacuum, there is much to be positive about.

However, in spite of this, the risk recruitment market slowed during the second half of 2015. According to our survey, even though 55% of risk departments reported they do not have the resources to meet the demands made upon them, only 62% reported they had attempted to recruit in the last six months, down from 69% in 2014. Furthermore, 17% reported they were unlikely to recruit in 2016, significantly up from only 5% last year. These responses to our survey confirm our own day to day experience of the risk recruitment market; it has slowed.

Banks making cuts The reason for this is the banking sector, which remains the largest employer of risk management professionals. There have been job losses across investment banking, with uK and European banks cutting their costs in response to lower trading volumes in areas such as fixed income, currency and commodities. Many have looked to withdraw from uneconomic business lines and cut their costs, along with back office workers.

Regulatory risks now the priorityWhilst the financial crisis had complex causes, credit was top. Banks subsequently invested heavily in their credit risk management systems and are still deleveraging today. Given this, they are managing credit more effectively. Losses within banks are currently less likely to be credit related but the result of rogue trading, online fraud, or criminals exploiting system weaknesses. These losses have been compounded by huge fines and penalties relating to their conduct in such areas as rate fixing, money laundering and mis-selling. As a consequence, banks are prioritising their regulatory risks and their approach to conduct and financial crime. Investment in these areas is increasing, but in some instances this is at the expense of their credit risk management resources. Credit risk is yesterday’s problem and, as certain as the world turns, will ultimately become a problem again. Today, however, it is regulatory risk.

Industry still growing Notwithstanding this shift and the caution that many banks are demonstrating as they rationalise, taking the financial services industry as a whole, the outlook for the risk recruitment market in 2016 is positive. There are banks, asset managers, insurance companies and innovative financial services groups that are recruiting strongly. The financial services industry along with the uK economy is still growing and there are many new opportunities for risk managers. The majority of demonstrably competent risk management professionals entering the recruitment market in 2016 with realistic expectations should not be disappointed.

ExECuTIvE SuMMARY01

Productivity and business investment are finally increasing, as the scarcity of workers focuses companies on how to use their employees more effectively. Given the risk recruitment market does not operate in a vacuum, there is much to be positive about. .

““

2

MARKET ANALYSIS02

VACANCIES

vacancy generation down The number of vacancies generated in risk management fell in the second half of 2015 across investment and corporate banking. uK and European banks went through cost cutting and redundancy programmes which, in some instances, included credit risk managers. More could potentially follow. Given this, these banks are more likely to recruit internally, which the response to our survey confirmed. Senior positions are frequently being filled internally, in many cases leaving the resulting more junior positions to be filled externally.

Whilst the vast majority of vacancies are replacement recruits and the rate at which risk managers are changing jobs has slowed, more positively, new positions within risk management are being created. For example, challenger banks and a whole myriad of alternative finance companies have been active in the market as they look to respond to regulatory pressure, innovate, or push into areas that established banks are retreating from. This is hugely positive for the career opportunities it is opening up.

A further development is that the 3 lines of defence model is increasing the number of risk managers employed in 1st line of defence roles. Going forward, operational risk vacancies are more likely to be control orientated business aligned roles. In some banks this is being done at the expense of positions in the 2nd line.

RATE of pLACEmENTS

Overall, the rate of placements has declined To provide a better insight into the dynamics of the risk recruitment market, this graph plots the rate at which placements have been made across the last four years. The graph demonstrates the rate at which candidates are being offered jobs which are then accepted.

Having improved in the first half of the year, the rate of placements declined in the third and fourth quarters. There are two reasons for this. Firstly, a decline in the rate of placements is typical when a recruitment market becomes more cautious and slows as it has done within investment and corporate banking. From our perspective as recruitment consultants, it is manifest by; interminable recruitment processes, candidates being rejected for irrational reasons that appear more like excuses, offers not being signed off, or ones that are unrealistically low.

Secondly, in spite of the slowdown in the market, there are banks and financial services groups across the industry that struggle to recruit. In some instances, they are not prepared to compromise on the standards they require, particularly given the need for risk managers to have not only the necessary technical skills but also the soft skills desired. In other instances, it is simply a chronic shortage of risk management candidates in certain areas such as Model validation or Investment Banking Operational Risk. Again, vacancies are going unfilled.

• Placement rate

• New vacancies• Outstanding vacancies

3

MARKET COMMENTARY03

Risk departments remain short-staffed

A telling finding from our survey was that in spite of the slowdown in the risk recruitment market, 55% of departments reported that they were insufficiently resourced for the demands made upon them. Whilst this is partly commercial, the cost of risk related regulation remains high and regulatory initiatives continue to drive a substantial proportion of the demand in the risk management recruitment market.

Regulation drives demand Whilst it has already been adopted by some banks, the need to comply with IFRS 9 is resulting in demand for risk managers with strong knowledge of Advanced Internal Ratings Based (A-IRB) models and credit risk stress testing across both retail and corporate banks. The Fundamental Review of the Trading Book (FRTB) in Market Risk is leading to demand for candidates with quantitative skill sets, as banks seek to conduct and submit the results of their Quantitative Impact Studies (QIS) to regulators. further regulatory initiatives include the Banking Reform Bill or Structural Reform, better known as ring-fencing, in US banks or those large US franchises, the Comprehensive Capital Analysis and Review (CCAR) & Business as Usual.

The impact of structural reform and the requirement for increased data and regulatory reporting is impacting bigger banks. A number have reorganised their risk and compliance teams and have created roles straddling both disciplines. Banks are seemingly looking to create an environment where the correct frameworks

and controls are in place to sit alongside their desk based monitoring teams. They need to demonstrate a cultural shift towards understanding and embracing compliance as a central pillar of how a bank operates. The right level of risk appetite is determined, before frameworks are then put in place to ensure this is not exceeded. They are now actively managing risk, rather than working after the fact.

New opportunities The growth of challenger banks and alternative finance companies is driving demand for risk managers with retail and commercial banking experience. As established banks scale back to focus on core areas of their business, the spaces they are vacating are being occupied by a whole myriad of alternative providers such as private equity funds, direct lending debt funds, insurance companies and peer to peer lenders. Demand for credit risk managers is being displaced from the traditional banking sector and into these companies.

A positive development A positive development for those working in risk management and other areas of corporate governance (such as compliance, audit and legal), is the way in which practitioners are increasingly moving between disciplines. The 3 lines of defence model is changing the background and experience of the type of candidates that companies are prepared to consider. Whilst up until recently the movement of people between the various disciplines that make up corporate governance was limited, it is now steadily accelerating. Although product and technical knowledge must remain a key part of corporate governance recruitment, innate and therefore transferable abilities are becoming a

greater part of the bargain.

Judgement, communication skills and business savvy are not necessarily acquirable skills and are all the more valuable because of it. Risk managers are appearing in internal audit, compliance and 1st line roles that include operations and technology.

Regional recruitment The banks and major financial services groups are continuing in their longer term plans to relocate back office and associated risk functions away from London and into regional centres. Whilst these include credit and market risk teams for corporate and investment banks, the major employers in the regions are retail banks which have credit risk teams based throughout the uK. Whereas the Central Belt in Scotland, the North West and West Yorkshire are already well established financial centres, other regions are not. Pushing into areas where there is a limited number of risk professionals and where the concentration of expertise simply does not yet exist, results in vacancies going unfilled or alternatively companies having to pay London equivalent salaries to attract those with the necessary skills and experience.

55% of departments reported that they were insufficiently resourced.

“ “

4

SECTOR ANALYSIS04

BUSINESS RISk

The business and operational risk recruitment market evolved in 2015. Whilst operational risk skill sets remain in demand, a slice of this demand has been displaced from traditional operational risk departments found in large financial services groups, into small / mid-sized banks, insurance companies and asset managers, 1st line of defence roles and compliance teams.

Demand from the major banks stalled in the second half of 2015. Redundancies have become more common and many banks have put recruitment on hold as they look to redeploy staff internally. This has affected risk management recruitment with the notable exception of 1st line of defence functions which have continued to recruit.

The Uk regulator is focusing on consequential risk and the failures in Conduct, Systems, and processes that have resulted in significant losses. Effort has focused on the level of understanding, measurement and mitigation of risk in the 1st line of defence.

The continued investment in financial crime and fraud will lead to opportunities for operational risk managers with an understanding of the inherent risks of people, processes and systems, to migrate into these areas. Furthermore, there are opportunities for operational risk managers to move into 1st line of defence functions, upskilling departments and educating the business about risk management and responding to regulatory enquires.

Demand is notable from smaller banks and specialists who do not have the internal resources to build 1st line of defence departments. They are seeking

technically strong risk managers with expert regulatory knowledge who can engage with business stakeholders and articulate the need for effective risk management.

Regulatory focus on the Internal Ratings Based (IRB) approach is also driving demand. The regulators ‘spotlight’ is the use tests, testing business 1st line of defence risk functions. Businesses have responded by employing their own risk managers (independently supported and challenged by the 2nd line of defence). The use tests ensure that business IRB is not used solely for regulatory capital purposes but is also there for best practice.

One area of continuous recruitment activity in operational risk has been capital modelling which requires a highly specialised and rare skill set. There were several senior moves in Operational Risk Capital Modelling in 2015, although the outlook for this demand in 2016 is less certain.

Within the insurance sector, the anticipated increase in the number of vacancies expected in preparation for the final implementation of Solvency II (SII) did not materialise in 2015. However, in spite of this, the demand for business risk managers has grown, typically for risk managers with pure operational risk experience who can deliver risk frameworks and perform general governance duties.

The pRA has become more active in the sector and is taking a tougher stance. For example, increasing the capital loads of companies who do not have the capability to conduct Own Risk Self-Assessment (ORSA). This is influencing the requirement for better equipped risk functions. Potential structural issues within major life and general insurers could also lead the

PRA to question capital adequacy and growth aspirations. If it happens, ORSA will again become more central to Board discussions and lead to external recruitment.

Demand from the sector is focused on technically strong risk managers with relevant life and pensions, Lloyd’s Markets or general insurance business experience. Risk managers with significant experience of imbedding ORSA requirements are in demand and this is likely to continue throughout 2016. As with many other areas, risk managers with strong soft skills are sought.

There are opportunities for operational risk managers to move into 1st line of defence functions, upskilling departments and educating the business about risk management and responding to regulatory enquires.

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5

The Senior Insurance Managers Regime (SIMR) is due to be implemented by March 2016. Whilst this is not currently seen as a potentially significant issue, the proposed rules will set out the regulatory framework to ensure that managers have clearly defined responsibilities and behave with integrity, honesty and skill. It may or may not have an impact on how risk managers are remunerated, it is however likely to have an effect on how risk takers are remunerated with the objective of discouraging excessive risk taking. It will require risk managers with knowledge of the regulations to implement the framework and to communicate its effectiveness to the regulator.

Within asset and wealth management, in-demand risk managers are those with core operational risk (business facing) skills who have relevant sector experience. The pool of potential candidates is limited and niche. As with other sectors, good communication skills and effective stakeholder management experience are highly desirable and come at a premium.

Demand rose throughout 2015 and remains strong. The majority of companies recruiting are currently small to mid-sized companies that historically have not been subject to regulatory scrutiny and have employed lean operational risk functions. The recent regulatory focus on the sector identified areas of weakness in asset managers’ risk frameworks, governance and controls. The sector has responded with a drive to recruit sector experienced operational risk managers. This has led to further candidate shortages and pressure on salaries. Companies have offered promotions, salary increases and other career based incentives in order to retain existing staff.

fINANCIAL RISk

Within banking, whilst there are elements of financial risk that are regulatory driven, however lending and trading activity are the key drivers. Risk managers primarily sit within credit and market risk analysis functions. Given that banks have already invested heavily in credit risk and are deleveraging, and given the downturn in trading activity, demand from the banking sector for traditional credit and market risk managers is flat. New positions are becoming rare and demand is being driven by replacement recruits. However, strong demand remains in those areas of credit and market risk management that are driven by regulatory demands. These, however, are usually highly specialised roles that require mathematical backgrounds and quantitative skills, which often prevent market and credit risk analysts from applying.

A source of demand from last year that is likely to be repeated is the demand for credit risk analysts with oil and gas experience from the corporate banking sector. This is as a result of the collapse in energy prices which is causing the rating agencies to downgrade many companies operating in the sector.Candidate availability in these areas is generally good, notwithstanding the competition for the very best candidates.

It is worth noting the number of highly experienced credit risk managers with corporate and investment banking experience who have been made redundant. This is being driven by a combination of de-leveraging and the need to cut costs, as these banks divert investment away from credit risk and into the need to combat losses in conduct, fraud and rogue trading.

More reassuringly, the demand for retail credit risk managers remains steady. Demand is coming from traditional uK retail banks, the challenger banks, peer to peer companies and consulting groups. Candidates with experience of both portfolio management and decision sciences are in demand and, generally, in short supply.

Looking forward, challenger banks and alternative finance companies are likely to provide a source of new opportunities for risk managers. The emergence of finance companies typically focusing on one or two specialist areas, such as consumer lending, asset backed finance, commercial real estate and corporate lending is encouraging.

Within the insurance sector there was demand from the Lloyd’s market for corporate credit analysts throughout 2015 and we expect this to continue in 2016. Companies in the sector have recognised that taking on bank credit risk can be profitable provided assets are understood and carefully selected.

The development of the challenger banks and alternative finance companies is likely to provide a source of new opportunities.

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6

As banks have looked to distribute their balance sheet risks, Solvency II has encouraged mono-line insurers to diversify their portfolios in order to reduce the amount of capital required. We anticipate 2016 to follow a broadly similar pattern to 2015. Candidate availability in this area is surprisingly good with many experienced bank credit risk managers looking for opportunities outside of the sector.

As is in the insurance sector, the recruitment market for financial risk within the asset management sector is limited. However, the sector has provided a steady stream of vacancies with investment and counterparty risk being the main drivers. Within investment risk, fixed income and equities experience are in most demand and this activity is being driven by the usual market dynamics.

Given recent market volatility, it is becoming increasingly critical for asset managers to ensure that risks within their portfolios are properly understood and hedged. Candidate availability is reasonably good, although those with strong quantitative skills and knowledge of both securities and derivatives remain in short supply. Asset managers should look for sell side risk managers, as there are always those willing to switch to the buy side. An interesting development in the sector is the growth of direct lending funds. Formerly an activity exclusive to banking, lighter regulation and more lenient capital requirements has led to a growth in funds that are willing to bypass the banks and lend directly to corporates. Many of these funds have been encouraged through investments that have been made by the uK government through the newly formed British Business Bank. We anticipate demand for corporate credit analysts with experience of analysing and approving loans to business to increase as the sector develops.

THE CoNTRACT mARkET

The demand for contractors remains strong and the results from our survey suggest that risk departments are becoming more likely to use this option. 21% of departments report that they routinely use contractors and a further 44% would consider using them to provide specialist skills.

There is currently demand for contractors with solid risk management framework experience. They are being used to assist when businesses have expanded via acquisition, to amend, develop and enhance their existing risk management frameworks and overall group operational risk policy to ensure they are fit for purpose and in line with best practice.

We have also seen demand for risk managers with good BCP experience. This has been a feature of many recent operational risk job specifications, as companies look to update their group impact assessments, identifying potential threats and protect themselves against disruptive incidents on a group wide level. Knowledge and experience of ISO 22301 and 27001 standards are therefore advantageous.

As we reported last year, there is currently lower demand for credit and market risk contractors, particularly for BAU positions where opportunities remain limited.

Most recently we have seen notable demand from the asset management sector. Operational risk contractors have provided flexible resources to a number of asset management companies as they have looked to restructure their risk management functions. There is currently steady demand from ‘challenger banks’ as well as recently established

niche financial service providers for contractors to provide coverage in areas such as regulatory risk, risk reporting, risk frameworks and risk strategy. Many are actually permanent positions based in London and the South East and, in the absence of permanent solutions, in the short term contractors have been used. Others are project focused to complete an initial set up before moving to BAu.

We have also seen operational risk roles in retail and other financial services sectors at BAU level following difficulties recruiting permanently. Again shortages of appropriate permanent candidates is resulting in contractors being used. Location has also been a factor for some, with companies based outside of London finding it more difficult to recruit permanent solutions.

More companies are seemingly looking to engage contractors on a PAYE fixed-term basis. This may be driven by their desire to reduce costs. It is not popular with contractors, and ultimately reduces the pool of contractors who would wish to consider such opportunities.overall, the outlook for the contract risk recruitment market in 2016 and beyond is looking positive.

Those with strong quantitative skills and knowledge of both securities and derivatives remain in short supply.

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7

SALARY GuIDE05We reported in our Salary Guide and Compensation Survey six months ago that the average salary increase achieved by risk managers changing jobs was 19%, down from 20% in 2014. However, those staying with their existing employer achieved a 7% increase, up from 6% in the previous year. The 7% for those who stayed is flattered by promotions and buy-backs; where those who have tendered their resignation are counter-offered with a higher salary to stay.

Overall, the results of our latest employer survey suggest that companies are finding candidate salary expectations have moderated. Only 17% reported their perception of candidate salary expectations to be excessive, against 22% last year. This no doubt reflects softer demand for credit and market risk managers.

more generally, a major factor driving salary increases is that companies are often looking to upskill when they replace leavers. This can have the effect of making it appear that salaries are rising faster than they are. Companies are

paying more because they are recruiting candidates with higher skill sets. Many companies are prepared to accept that recruiting high quality risk managers will be expensive. However, they still expect value for money. In our experience, if companies are prepared to compromise on the suite of experience and abilities sought, they are unlikely to pay for the privilege. The risk manager concerned may simply be pleased to receive an offer.

Salary GuidanceBarclay Simpson analyses the salary data that accumulates from the placements we make in the uK. This provides a guide to salaries for risk managers. The salary ranges quoted are for good, rather than exceptional individuals and take no account of other benefits in addition to salary that usually accrue in the risk market. Barclay Simpson will release a Compensation and market Trends Report in July that will include more detailed information on salaries.

RETAIL BANkING - CREDIT RISk RANGE AVERAGE

Junior Analyst (0-12 mths) £22 – 30,000 £27,000

Analyst (2-3 years) £25 – 35,000 £30,000

Senior Analyst (3-6 years) £30 – 45,000 £40,000

Manager (6-9 years) £40 – 65,000 £57,500

Senior Manager (9-12 years) £50 – 80,000 £65,500

Director (12+ years) £75 – 100,000 £87,500

Head of Credit Risk £100 – 140,000 £120,000

RETAIL BANkING - opERATIoNAL RISk RANGE AVERAGE

Analyst (0-3 years) £30 – 50,000 £40,000

Manager £50 – 70,000 £60,000

Senior Manager £65 – 100,000 £82,500

Director £85 – 130,000 £107,500

Head of Operational Risk £100 – 200,000 £150,000

8

CoRpoRATE INVESTmENT BANkING - opERATIoNAL RISk RANGE AVERAGE

Graduate / Junior Analyst (0-12 mths) £25 – 35,000 £30,000

Analyst (2-3 years) £35 – 50,000 £42,000

Associate vice President (3-6 years) £45 – 70,000 £57,500

vice President (6-9 years) £65 – 100,000 £82,500

Director (9-12 years) £90 – 140,000 £120,000

Executive Director / Senior vice President (12+ years) £100 – 200,000 £150,000


Managing Director £200 – 300,000 £250,000

CoRpoRATE INVESTmENT BANkING - mARkET RISk RANGE AVERAGE


Analyst (2-3 years) £40 – 60,000 £50,000



Executive Director / Senior vice President (10+ years ) £100 – 200,000 £150,000

Head of Market Risk / Managing Director £150 – 250,000 £200,000

CoRpoRATE INVESTmENT BANkING - CREDIT RISk RANGE AVERAGE


Analyst (2-3 years) £40 – 50,000 £45,000

Associate vice President (3-6 years) £50– 70,000 £60,000


Executive Director / Senior vice President (10+ years) £100 – 130,000 £115,000

Head of Credit £100 – 150,000 £125,000

Chief Credit Officer £150 – 300,000 £225,000

Managing Director £150 – 250,000 £200,000

pRIVATE BANkING - CREDIT RISk RANGE AVERAGE


Analyst (2-3 years) £40 – 50,000 £45,000



Director (9-12 years) £80 – 110,000 £92,500

Head of Credit Risk £110 – 140,000 £125,000

9

pRIVATE BANkING - opERATIoNAL RISk RANGE AVERAGE

Junior Analyst (0-12 mths) £25 – 40,000 £32,500

Analyst (2-3 years) £35 – 55,000 £45,000



Director (9-12 years) £100 – 150,000 £125,000


ASSET mANAGEmENT - opERATIoNAL RISk RANGE AVERAGE

Junior Associate (2-3 years) £35 – 55,000 £45,000



Director (9-12 years) £100 – 150,000 £125,000


ASSET mANAGEmENT - mARkET / INVESTmENT RISk RANGE AVERAGE

Associate £40 – 70,000 £55,000

vice President £70 – 150,000 £110,000

Director £90 – 175,000 £132,500

Head of Investment Risk £100 – 200,000 £150,000

Chief Risk Officer £200 – 250,000 £225,000

INSURANCE - RISk RANGE AVERAGE

Analyst £30 – 50,000 £40,000

Manager £40 – 75,000 £57,500

Senior Manager £70 – 110,000 £90,000

Director £100 – 150,000 £125,00


Chief Risk Officer £150 – 250,000 £200,000

10

EMPLOYER SuRvEY 2016Risk Management

06

11

The results of our recently completed employer survey are included in this section.

The results provide some interesting conclusions and cover:

uRecruitment budgets

uCurrent recruitment needs

uSkills / qualities / experience most in demand

uViews on availability and salary expectations of candidates

ukey recruitment drivers in 2016

uRecruitment intentions for 2016

Our survey of employers covered not only risk management but also internal and IT audit, compliance, security and legal. Respondents were individuals with responsibility for recruitment who were asked questions designed to elicit their perspective on the market.

As a result, in addition to providing specific findings for risk management, we are also able to make comparisons with the broader picture across corporate governance.

.

Contents1. key conclusions from Risk management Employer Survey

2. Risk management Survey results

3. Broader context – (comparison with other areas of corporate governance)

11

12

1

key conclusions

In spite of a slowdown, the majority of risk management departments report they are under-resourced. A clear majority of companies also anticipate they will recruit at sometime in 2016. Given such demand, competition for staff is intense and companies report broadly based difficulties in attracting and recruiting risk managers of the required calibre.

Risk departments often under-resourcedu55% of managers believe their risk department is

“insufficiently resourced for the demands made on it” (up from 53%)

Recruitment activity down u62% of risk management departments recruited or

attempted to recruit in the last 6 months of 2015 (down from 69%)

Recruitment budgets flat uDespite 21% of managers reporting an increase in their

recruitment budget, 23% report a decrease

Increasing demand for higher levels of experience u22% of departments are likely to look to recruit risk

managers with over 7 years’ experience (up from 17%)

uWhilst only 5% are likely to look for risk managers with less than 2 years’ experience (down from 7%)

Departments still finding it difficult to recruit u50% of departments report that risk managers are difficult to

find (down from 56%)u69% of managers say that they are finding it difficult to

recruit (down from 77%)

Technical skills hardest to find u65% of departments report that finding risk managers with

the required technical skills is the greatest challenge, with just 35% reporting interpersonal skills

External resources more likely to be used u52% of departments using external resources for specialis

skills (up from 43%)uRisk management departments report they are likely to

become more reliant on external resources

Salary expectations generally affordable u17% of departments report salary expectations excessive

and beyond their budget (down from 22%), while 83% consider them generally affordable

Demand set to continue in 2016 uOnly 17% of departments report they are unlikely to recruit

in 2016 (down from 5%)

Recruitment remains a significant challenge

2

Employer survey results

13

Risk departments often under resourced

Q - Do you feel your department is sufficiently resourced for the demands that are made on it?

Level of recruitment activity down

Q - Have you recruited, or attempted to recruit, externally in the last 6 months?

Demand

Recruitment budgets flatQ - Has your recruitment budget increased in the last year?

(Question not asked in 2013)

Still only 17% unlikely to recruit in 2016Q - What are your recruitment plans for 2016?

14

Candidate availability

Good candidates still hard to findQ - How would you rate the availability of candidates?

Continued difficulty in recruitingQ - Overall, have you found it difficult to recruit?

Increasing demand for higher levels of experienceQ - When recruiting, what level of experience are you most likely to request?

15

Q - What has been the greatest challenge?

Q - In order of significance, what are the key considerations when deciding to progress a candidate to offer stage?

Consideration Weighted average 2013

Weighted average 2014


Technical suitability 5.0 5.2 4.6

Interpersonal skills 5.0 4.6 4.4

Cultural fit 4.2 3.5 4.0

Perceived desire to work for the Company / Department 3.0 3.5 3.3

Professional & educational qualifications 2.3 2.8 3.0

Input from HR 1.6 1.1 1.6

Technical skills hardest to find

Recruitment resourcesRisk departments more likely to recruit internally

Q - What is your principal source of candidates?

15

16

Q - To what extent do you rely on external resources to achieve your departmental objectives?

External resources increasingly important

Q - Do you anticipate your reliance on external resources changing?



It is encouraging that both the breadth and depth of the recruitment market is developing.

“ “

Other findings

Internal recruitment growingQ - In your experience, where are you most likely to recruit from?

Salary expectations generally affordableQ - What has been your perception of candidate salary expectations?

Fundamental need likely to be key recruitment driver

Q - In order of significance, which will be the most important recruitment drivers in 2016?

factor Weighted average 2013



Replacement recruitment 3.6 3.6 4.0

Business growth / development 3.8 3.6 3.5

New regulation 3.2 3.5 3.3

Business as usual 2.1 2.1 2.4

New products 2.3 2.5 2.0

Diversity and inclusion not commonQ - Do you have any diversity and inclusion targets that may influence your recruitment decisions?


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3Broader context Rest of results

The following tables compare the results from risk departments with those from internal audit, security & resilience, compliance and legal. Certain figures have been highlighted to make it quicker and easier to spot key differences.

Departments generally under-resourced

p As was the case last year, a high percentage of companies in all disciplines report being under-resourced

p Resourcing problems highest in Compliance and Security

p With the exception of risk, where more budgets are decreasing than increasing, budgets are increasing in all other disciplines

p The most significant increases are in Compliance and Internal Audit

Q - Do you feel your department is sufficiently resourced for the demands that are made on it?

Recruitment budgets increasing in most areas

p Around three quarters of companies across all disciplines have recruited or tried to recruit in the last six months

p Highest level of recruitment in Compliance

High level of recruitment across all disciplines

Q - Have you recruited, or attempted to recruit, externally in the last 6 months?

Q - Has your recruitment budget increased in the last year?

Demand

Area Yes it has increased

No, it remains the

same

No, it has decreased

Compliance 42% 49% 9%Risk 21% 56% 23%Internal Audit 40% 51% 9%Security 33% 58% 9%Legal 41% 43% 16%

19

Candidate availability

p Candidates difficult to find in all disciplines

p Greatest pressure in Compliance

p Least pressure in Risk and Security

p Around 70% of all companies found it difficult to recruit in 2015

p This figure rises to nearly 80% in Compliance

Good candidates remain difficult to find

Successful recruitment even more difficult

Q - How would you rate the availability of candidates?

Q - Overall, have you found it difficult to recruit?

Area plentiful Generally available

Difficult to find


p Whether for replacement, or newly created positions, a high level of activity is planned for 2016

p In Security and Legal, 91% of respondents expect to recruit in 2016

High level of activity planned for 2016

Q - What are your recruitment plans for 2016?

Area Likely Replacement UnlikelyCompliance 48% 40% 12%Risk 24% 59% 17%Internal Audit 36% 49% 15%Security 59% 32% 9%Legal 45% 46% 9%

20

p 3 or more years’ experience is key in all disciplines

Experience remains major factor in recruitment

Q - When recruiting, what level of experience are you most likely to request?

Area < 2 years 3-5 years 5-7 years 7-10 years > 10 yearsCompliance 11% 44% 26% 10% 9%Risk 5% 32% 41% 18% 4%Internal Audit 6% 62% 19% 11% 2%Security 5% 32% 31% 26% 6%Legal 7% 59% 17% 15% 2%

key requirements

p As was the case last year, technical skills are the greatest challenge in recruitment across all disciplines

p Interpersonal skills remain important, particularly in Internal Audit and Security

Technical skills still most important

Interpersonal skills key to making offers

Q - What has been the greatest challenge?

Q - In order of significance, what are the key considerations when deciding to progress a candidate to offer stage?

(Please note that the legal results have been adjusted to match other figures as the legal survey didn’t include the HR option.)

Area Technical suitability

Interpersonal skills

Cultural fit keenness Qualifications HR input

Compliance 5.1 5.0 4.1 3.1 2.7 1.5Risk 4.6 4.4 4.0 3.3 3.0 1.6Internal Audit 4.5 4.6 3.7 3.1 3.2 1.8Security 4.9 5.4 4.2 2.8 2.8 1.4Legal 4.9 3.7 3.6 3.0 2.8 -

p When it comes to progressing to offer stage, interpersonal skills become more important in all areas apart from Legal

p They are now more important than technical skills in Internal Audit and Security

p Technical suitability is the key in Legal

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p With the exception of Security, recruitment consultancies are the main source of candidates

p The use of recruitment consultancies is highest in Compliance, possibly a reflection of the recruitment pressures departments are facing

Salaries generally affordable

Recruitment consultancies still main source of candidates

Q - What has been your perception of candidate salary expectations?

Q - What is your principal source of candidates?

Area Excessive more than anticipated

Reasonable


Area Internal recruits

Direct advertising /

referrals

Internal team / direct

sourcing

pSL of RECs

Range of consultancies

Compliance 13% 3% 9% 53% 22%Risk 30% 3% 13% 46% 8%Internal Audit 10% 8% 13% 51% 18%Security 23% 4% 24% 42% 7%Legal 6% 7% 19% 53% 15%

Recruitment resources

Salaries

p Broad agreement that salary expectations are generally affordable

p Least concern in Risk and Internal Audit

p Greatest concern in Compliance and Security

ABOuT BARCLAY SIMPSON07Barclay SimpsonBridewell Gate, 9 Bridewell PlaceLondon EC4V 6AWTel: 44 (0)20 7936 2601Email: [email protected]

If you would like to discuss any aspect of the reports please contact the following divisional heads:

Corporate Governance Adrian Simpson [email protected] & IT Audit Daniel Flynn [email protected] Matt Brown [email protected] Tom Boulderstone [email protected] Mark Ampleford [email protected] Jane Fry [email protected]

To discuss our international services please contact:Europe Tim Sandwell [email protected] East Chris L’Amie [email protected] Pacific Russell Bunker [email protected] America Daniel Close [email protected]

Barclay Simpson is an international corporate governance recruitment consultancy specialising in internal audit, risk, compliance, security & resilience, business continuity, legal and treasury appointments. Established in 1989, Barclay Simpson works with clients in all sectors throughout the Uk, Europe, middle East, North America and Asia-Pacific from our offices in London, New York, Dubai, Hong kong and Singapore.

We add value by using our unique focus on corporate governance, our highly experienced specialist consultants and access to both the local and international pools of corporate governance talent. our strength lies in our ability to understand client and candidate needs and then to use this insight to ensure our candidates are introduced to positions they want and our clients to the candidates they wish to recruit.

for more in-depth coverage, comprehensive reports and compensation guides exist for the Internal Audit, Risk, Security & Resilience, Compliance and Legal recruitment markets. These can be accessed from the links below. We also produce other specialist reports, each of which can be accessed for free on our website: www.barclaysimpson.com

www.barclaysimpson.com/internal-audit-market-report-2016www.barclaysimpson.com/risk-management-market-report-2016www.barclaysimpson.com/compliance-market-report-2016www.barclaysimpson.com/security-and-resilience-market-report-2016www.barclaysimpson.com/legal-market-report-2016

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corporate governance recruitment market report 2016 risk ...the risk management recruitment market....

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