Risk Management Watch: CROs Remain Hot Commodities
Risk management has become an offensive field. Corporate boards today face unparalleled levels of business complexity, new regulations and mounting shareholder demands. As a result, executive search firm, A.E. Feldman, says risk management jobs are evolving to better manage initiatives to ensure that business objectives are met, losses are minimized, business processes are improved and greater accountability is achieved. In short, risk is the name of the game.
Most recently, California State Teachers’ Retirement System (CalSTRS) is bolstering its risk management efforts after suffering it’s first loss in six years. MSCI Barra recently announced that CalSTRS, the second largest public pension plan in the US with $162.2 billion in assets under management, has chosen to use BarraOne for enterprise-wide portfolio risk management.
BarraOne says it will help CalSTRS “monitor portfolio risk and make asset allocation decisions, as well as in the portfolio risk management of CalSTRS internal equity program.”
Meanwhile, one of the world’s most successful bond fund managers, Pimco’s Bill Gross, expects the fall-out from the U.S. subprime mortgage crisis to hit $1 trillion - in terms of the amount that will have to be written off the global financial services industry’s combined balance sheet, reports Dow Jones Financial News. Merrill Lynch and Wachovia are two more banks who had billion-dollar writedowns in the second quarter.
Merrill Lynch recently posted a wider-than-estimated second-quarter loss on another $9.7 billion of credit-market writedowns, according to Bloomberg. And in the wake of a second quarter net loss of $8.9 billion, Wachovia announced that Chief Risk Officer, Donald Truslow, plans to retire once a successor is named. It’s the latest departure from the troubled bank as it seeks to recover from massive losses tied to mortgages.
Robert K. Steel, CEO and President said in a statement, “In the short term, the entire organization is focused on protecting, preserving and generating capital; reinforcing Wachovia’s strong liquidity position; and reducing risk.”
Adding to the list of banks focusing on risk, First Financial Bancorp recently announced that John Sabath has been promoted to Senior Vice President and Chief Risk Office. Sabath will be responsible for supervision of the company’s risk management function which includes commercial and retail credit, compliance, operational, market, strategic and reputation risk.
Today, as the economy continues to slow, banks are relying more heavily on their risk management divisions to help protect them from multibillion dollar writedowns. Seeking Alpha says risk professionals are becoming more involved in everyday affairs…not just the tiny voices in the back of the room. Industry veterans now recruiting for A.E. Feldman echo this view, pointing out that Chief Risk Officers are being handed more power.
To learn more or inquire about job trends in risk management the lines of communication are open. Contact the Mitch Feldman, President of A.E. Feldman, and the firm’s executive recruiting team here.
