Guide to Careers in Market Risk

I've been a long-time lurker on this site, but decided that I wanted to make a post giving some basic information about careers in market risk. I know it would have helped me to have more information about exit opportunities, day-to-day activities, work life balance, and compensation when I was considering whether a career in market risk was for me. I'd also be happy to answer any questions anyone has as well so feel free to ask.

General Responsibilities of MR as a Division

All of the revenue generating divisions within the bank are covered by a team within market risk. Depending on the business that they cover, market risk teams interact at varying levels with the front office. For example, market risk teams that cover trading sit in the same area as the traders and spend a large portion of their time working directly with the trading desk, but teams that cover less volatile businesses such as retail or asset management have less interaction, but still do communicate a fair amount with their respective front office. Market risk serves to hedge the different risks associated with the market conditions in that line of business. An example of this would be analyzing the effectiveness of interest rate hedges for any products that have interest rate exposure (e.g. loans, bonds). Ensuring that the bank stays within its predefined limits for various stress scenarios is the most important responsibility of market risk as a whole. 

Day-to-Day

Analysts typically spend most of their time producing daily reports and checking for changes in the bank's exposure to different market changes. Project work varies greatly and could include looking into potential market risks of certain transactions that the bank are considering, looking at more effective ways to hedge different risks, or modeling new stress scenarios. During periods leading up to meetings with regulators, most of an analysts focus is on generating the necessary reports and information for leadership to then use with the regulators. Other times of the year usually allow more time to work on special projects and work with the front office more. 

Exit Opps

I've found that the exit opportunities for market risk analysts/associates are strong when compared to the rest of MO/BO functions. Many people from market risk leave to work in investment banking, trading, and have even seen a few go to hedge funds. It is very dependent on what business you get the most exposure to during your time in market risk. There is a lot of face-time with the people in the FO divisions, so networking is fairly easy. However, I've found that a lot of people begin their careers in FO divisions and then transition to market risk due to the strong work-life balance.

Compensation

Pay varies a decent amount based on location and bank. For those who work in NY, base is ~$75-80k with bonuses putting you a little under $100k all-in as a first year analyst. Other locations are lower due to COL. There is an average progression in salary and bonus with associates pulling in anywhere between $110-125k all-in. VPs and MDs have different compensations based on how long they've been at the bank as VP could range in some cases to people 6 to 20 years into their career. 

Work-Life Balance

The most attractive part of market risk or even risk in general is the work-life balance of the position. Most analysts work around 8-8, but could range from 8-5 or 8-10 depending on how busy the desk you cover is. There also isn't much stress being in market risk. Things are fairly steady and there aren't a lot of hard deadlines that you'll face.

If there is something that I didn't cover above that you're curious about, definitely ask away and I'll try to answer to the best of my knowledge. Hopefully this helps anyone who is considering a job in market risk.