How to become a useful risk professional

As you can tell from my tag I’m currently working in corporate finance. However my educational background is in pure mathematics so there is an obvious attraction towards quant and risk management roles. Particularly in hedge funds.

On top of that, my job is very comfy. It is basically a 9 to 5 Monday through Friday so as you can imagine I have a lot of free time I’d like to invest in something. I don’t know what will be of me in the future as I could go along many different paths but regardless of what actually happens, I feel like it makes the most sense for me to build myself up as a risk professional. A generalist, but also heavily oriented towards investment risk. Therefore I find it reasonable to ask you what I should do to achieve this goal. If you are a risk manager then please let me know what the most important skills are. If you are not in risk then let me know what would make me useful for you if I were your risk manager.

I’ve also thought of the following options and I’d like to get an idea of how good you find these to be:
1) Going for a masters in mathematics
2) Going for a masters in financial mathematics
3) Going for a masters in data science
4) Doing the CFA
5) Doing the FRM
6) Getting actuary certifications
7) Self-study a healthy mix of the above but get no particular degree/cert.

I could reasonably only do 1 in 1-2 years so I want to be careful about what I decide to commit to.

 

I say give #3 a try. 

Post 08 crisis, a lot of FinMath and MFE professionals have pivoted from doing risk in banks (doing CCAR / DFAST stuff) to data science. Why don't you try that route? That's where it's secularly growing, it solves real business problems and with better culture / IT infrastructure, versus banks and MOST hedge funds (maybe except places like Citadel where they invest heavy on the tech side). Even actuaries are working at transport-related internet companies like Uber and Doordash as they move into a self-insurance model. Pick a career path with strong tailwind. 

 
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I appreciate this perspective quite a lot however I feel rather reluctant to become a data scientist.

I actually already have the basic skills of a data scientist and recently received an offer from a bank to join their data science team but I declined it. I felt like the impact I was going to make on the market through my models was going to be too indirect. Definitely too indirect compared to my current position where financial planning decisions I am involved in have very real tangible effects in the market.

I am also reluctant to go into tech mainly because I don’t like it. I may be weird but when I look at things mathematically, I believe that the only business model that actually works is banking and finance (as in funds). Everything else just feels like a statistical anomaly. Every successful business that is not a bank or a fund feels like something that just got lucky and will likely be replaced in 100 years. History proves me right in this regard, as banking is as old as time while everything else is new. And the older stuff like video rentals die out. I want to directly work with money. My product is money.

If I was to become a data scientist I feel like I’d want to specifically apply modelling in a hedge fund. Where my models would inform decisions that would then move the markets. That is what I would be passionate about. How realistic is this?

 

Sure, but who doesn't want to make money with their models? I presume one way is to build a model now and generate alpha using your model, and then show it to your interview once you have built a sustainable track record. That's the extent of my knowledge on that matter. 

Quant hedge fund front office is competitive where you probably compete with top STEM school PhDs, so good luck with that. 

 

Going to take the other side #3 is not for STEM grads as a STEM grad you should be able to do #3 on your own. 1,2,4 is your main choices and either way #4 prolly needs to be done.

#5, is rather easy and can be completed on the job.

Actuary is more insurance and a totally different career you’d have to change jobs and are already behind career-wise there.

 

I would recommend the certifications.

I also got my undergrad in maths and moved to investment risk (LO not HF). The advice I got on master's programs was, "only do it if you don't have a job yet". Not knocking the programs as they produce extremely well-qualified individuals, just noting the opportunity cost associated. I went the certification path, first the FRM now working on the CFA. The FRM is akin to a self-study version of the financial maths or computational finance programs that can be completed concurrently while working. I'd recommend starting with the FRM given the shorter time horizon (only 2 parts), higher probability of success (pass rates are ~55%), and your maths background aligning with the material.

 

This is a perspective I agree with a lot but I do have my doubts. Maybe you can give me your opinion so I can use it as a data point.

First regarding masters, yeah. It’s not even the cost itself, it is all the money I would stop making. However this is why I am exclusively considering online masters (from top 10 universities) that I could do without leaving my job. I am not too convinced though.

Regarding the FRM, I also feel this is the obvious choice but I get a feeling like the FRM is a CFA-lite, as the CFA also has some content regarding risk. Would you agree with this perspective? Or the FRM a true value-add independent from the CFA?

 

Perhaps the online master's is attractive if you can complete it online and you feel the value of a school name is worth the price, I cannot comment on that since I never pursued that path.

I disagree with the notion that the FRM is a CFA-lite. The CFA touches on risk but, the FRM provides a depth of knowledge on risk and quantitative topics well beyond the CFA. Both exams cover different aspects of investing. High level, the FRM focuses on risk measurement and management while the CFA is geared toward fundamental analysis. Also, the FRM is more concentrated than the CFA, the knowledge learned will be directly applicable for a move into investment risk. You can find more detail about topic coverage on the program websites.

 

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