Credit Risk Management - Any insight on hours of lifestyle?

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I'm looking into risk management, specifically with a BB. I've searched through some threads but It looks like not a lot of people here went down that road. I'm talking about credit risk not market risk.

Any insight? hours/lifestyle/pay/exit opportunities?

From what I've learned so far...

Hours 9-6ish?
Pay lower than street - how low? how is pay progression?
lifestyle culture - middle/back office
exit opportunities to f500 corporate development, PE/VC?

Thanks

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Comments (88)

May 24, 2011

Hours - 9-6 is a fair estimate, depending on function
Pay - depends on city, but lower than IB base, and much lower bonus (10-15% maybe). Risk is a cost center.
Lifestyle - more laid back, middle, closer to back office, depending on function
Exit opps - corp finance, others require more networking and effort

Feel free to PM for more info.

May 24, 2011

Interviewed for this position at a top BB (GS/MS/JPM), definitely not back office. It's middle office, but probably closer to front than back. Base pay was same as IB I believe, bonus significantly less but still decent. Hours could be variable depending on group. No idea about exit ops

May 26, 2011

Credit risk is most simply defined as the potential that a bank borrower or counterparty will fail to meet its obligations in accordance with agreed terms. The goal of credit risk management is to maximize a bank's risk-adjusted rate of return by maintaining credit risk exposure within acceptable parameters.

May 29, 2011

Well, I don't know much about employment conditions and opportunities, but you should know that there are new counterparty credit risk management software today, and learning how to use one or two might boost your chances of getting a better position (or at least, a better-paying entry-level position).

Jun 1, 2011

You can feel free to PM me for more info, but credit risk is a good "lifer" type job imo. Base pay the same as IB (at least at BBs), bonuses will be at most half of the IB (if you are top performing), and hours will generally be 9-dinner time. Sometimes you will stay late to get an internal approval in place, and weekends are generally free. You do have some exposure to bankers, but almost zero client interaction. The pay difference widens as you become more senior.

Exit opps will be aligned towards anything debt related, for example a distressed debt HF or something, but those are still harder to get than someone coming from IB. I have seen some credit risk people lateral into a banking or equity research type role, some even to trading, but it is much harder to do than if you are in IB already. PE opps are virtually nil.

On the flip side, if you are looking to MBA, being in risk management still places you in the "finance" bucket but gives you more time to do your applications.

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Jun 23, 2013
electriclighto:

You can feel free to PM me for more info, but credit risk is a good "lifer" type job imo. Base pay the same as IB (at least at BBs), bonuses will be at most half of the IB (if you are top performing), and hours will generally be 9-dinner time. Sometimes you will stay late to get an internal approval in place, and weekends are generally free. You do have some exposure to bankers, but almost zero client interaction. The pay difference widens as you become more senior.

Exit opps will be aligned towards anything debt related, for example a distressed debt HF or something, but those are still harder to get than someone coming from IB. I have seen some credit risk people lateral into a banking or equity research type role, some even to trading, but it is much harder to do than if you are in IB already. PE opps are virtually nil.

On the flip side, if you are looking to MBA, being in risk management still places you in the "finance" bucket but gives you more time to do your applications.

Thank you for your input. You know what the base+bonus range looks like in credit risk at the VP/Director/MD level?

Jun 1, 2011

I wish I had more insight on salaries at a more senior level, but from my risk MD had told me (when I still worked there) was that the base wasn't as high as a similarly tenured banker would make, and certainly not the bonus, but it was a cushy "9 to 5" ish job at that level whereby you can live comfortably. It's more of a lifer job than ladder climbing.

Aug 30, 2013

Question: Does a credit risk career differ across banking sectors?
Say between Investment bank, and Consumer Finance (loans, mortgages), to corporate banking (Equipment finance, middle market loans, project finance, export finance, and the rest) ?

Excuse my ignorance but I am still learning about banking and pretty clueless about what constitutes a solid career across the field. In my experience in consumer finance, a credit analyst is what I would call "middle end" and defo involved in deals (obviously as managing risk of specific deal, underwriting it and so on), while I hear the role is completely different in M&A / IB.

Can anyone clear the mist and explain what is and isn't ?

Jun 1, 2011

It depends on how the bank treats the credit risk team. For the most part, risk isn't going to be involved in the weeds on a M&A deal (for instance, valuation, negotiating, etc). Obviously a large deal will involve credit, for the aspect where it is raising revolver or term debt and it will need to be approved up the risk chain under a certain period of time. Beyond those portfolio products, I don't think risk will be involved more than that. Maybe a little ABS but more banks with a robust risk group will also have a separately robust ABS team.

Sep 5, 2013

.

Sep 5, 2013

This was a predicament when I chose to go with a Boutique for S&T as opposed to a top BB for Market Risk.

At the end of the day, I don't think bonuses will ever converge between FO and Risk. I think that Risk Managers are probably underpaid relative to Traders/Bankers for the work that they do and the responsibilities that they take on, but to make money in this industry you need to take risk, not manage risk. Period.

There are trade-offs of course: quality of life, less stress, more job stability, etc... I think it's solely up to personal preferences. But I will say that Risk is definitely not a bad role, especially in this tough job market.

Sep 5, 2013

i am currently doing a credit risk summer at a top BB and was really surprised that the people there pull some serious hours - like 8am to 10-1 on a regular basis. heck even i did 8am to 8pm on my first week.
isn't this reflecting the growing importance placed on risk management and, thus, equating to higher compensation? my MD was telling me that he's seen a stark difference btw the importance given to CRM now compared to a year or 2 ago.
but yea the experience is really awesome - i would def recommend any rising sophs/juniors to take a look at risk management. i am doing very legit work - modeling, stress tests, writing complete research reports (i.e. rating own internal exposure to counterparties) pm me if you want more info

Sep 5, 2013

Hey slik,

I am actually pretty interested in CRM. I have just recently been exposed to this field through my current internship. I am however not at a BB, but at one of the GSEs. I can tell you that it is quite an interesting time and experience.

I was wondering if you could talk about your day to day and I guess in depth of what type of work you do.

Thanks

Sep 5, 2013

so this is my 2nd week of the internship and its really awesome. my team covers munis and we work with the public finance group and s&t on a regular basis. right now we're "managing the risk" of a huge bond issuance in which i am doing all sorts of modeling (dcf, lgd, pro forma) and stress tests to see different types capital scenarios and debt service coverage levels they would need so they wont default. we also went on a series of meetings with ibd and the municipality trying to find out as much of their exposure and risk. there are a ton of other stuff that i will be doing that i haven't even touched upon yet.

another part of my day to day activities is that we have to write research reviews on ALL of our counterparty exposures - i.e. write a report on our exposure to GM/detroit etc. and internally rate the debt/exposure by doing due diligence and a shit load of research. after doing the research we let traders/sales teams or bankers know whether or not we feel safe with the exposure.

i don't do any 'shitty' work like filing/copying and printing shit all day/ or just 'assisting'

i am doing the modeling, writing the research reviews and doing a lot of due diligence (contacting and interviewing internal research analysts/municipalities/s&p/moodys). you get really well versed in munis or whichever sector you're covering. the guys here are intense, they know more about detroit or california than many of the seasoned professionals at these municipalities.

the hours are actually kinda wild - last week i did 8am to 8pm everyday, except for friday when i left at 6.

this week has been bad - 8 to like 9/10pm but thats because of the bond issuance we're working on.
and believe me there are PLENTY of networking opportunities, the entire public finance group knows me pretty well already. to be honest with you, CRM to me doesn't exactly feel like middle office - my experience is definitely more front office oriented.

please let me know if you have any other questions.

Sep 5, 2013
slik vik:

and believe me there are PLENTY of networking opportunities, the entire public finance group knows me pretty well already. to be honest with you, CRM to me doesn't exactly feel like middle office - my experience is definitely more front office oriented.

I would like to point out that middle office/back office work isn't necessarily defined by shitty work like filing/data entry.

Front office work would consist of a client facing role, and I don't think that you have much of a chance to face external clients in CRM. You do work with front office groups (eg. public finance & traders/salesmen), but are monitored by the back office. In this way, I think CRM is more middle-office work.

Don't confuse my point, working in CRM may be very exciting/rewarding, but I think it would be misleading to call it a front office experience.

Of course, feel free to disagree with me.

"I'm not sure what the four 9's do, but the ace, I think, is pretty high."

Sep 5, 2013

to bluehorseshoe: this past week i've been to atleast 3 meetings with clients (and conference calls), with more coming up tomorrow and the rest of next week. i am not sure if this is the norm, but there are definitely client meetings that we are involved with. we were asking the municipality some due diligence questions and trying to work with them on how to mitigate risk.

Sep 5, 2013

My internship is currently in a MO group, and we have constant day to day contact with both traders and the clients that the sales department deals with. It's become very clear the diffrence between BO/MO/FO where many people who work in the FO do not see it, but it is very apparent.

Sep 5, 2013

Bump for new info. How has Risk changed since the crisis? Is it more respected, leading to higher compensation? Even though it's smaller than IB, are analysts guaranteed to get bonuses?

Sep 5, 2013

Any insight about the above post-crisis? How will pay vary from shop to shop?

Sep 5, 2013

I don't think it's that much.

Sep 5, 2013

CR is generally considered MO and one of the better MO functions, along with strategy, legal and treasury. Usually risk is paid same salary, smaller bonus.

Sep 5, 2013

That's odd. My understanding was the the base was the same as IB and that bonuses were considerably lower.

    • 1
Sep 5, 2013
LHDan:

That's odd. My understanding was the the base was the same as IB and that bonuses were considerably lower.

Echo this. BBs pay the same base salaries to all the entry-level people, the bonuses are where the deltas open up. If he came in at $80k, he's either counting his sign-on bonus or is coming over as a second-year.

Sep 5, 2013

He is a first year analyst, coming out of undergrad.

Sep 5, 2013

Base is 70 + 10 signing bonus. Very standard among BB banks for FO and MO functions. Depending on where you are, CR is considered to be FO.

Yes bonuses are "smaller" but it is also a "I want a career out of this" type of position rather than the 2 year and out model.

Sep 5, 2013
Whiskey5:

Base is 70 + 10 signing bonus. Very standard among BB banks for FO and MO functions. Depending on where you are, CR is considered to be FO.

Yes bonuses are "smaller" but it is also a "I want a career out of this" type of position rather than the 2 year and out model.

Agree that the 70 + 10 makes sense, but I think the OP was under the impression that he/she was talking about 80k base, which isn't the case for a first-year.

Sep 5, 2013

So if 80k is total with signing and performance bonus. I am assuming the base is around 65k then? This make sense then.

Sep 5, 2013
TeddyTheBear:

So if 80k is total with signing and performance bonus. I am assuming the base is around 65k then? This make sense then.

Base 70, signing 10, performance either nonexistent or in the 10-15 range.

Sep 5, 2013
TeddyTheBear:

So if 80k is total with signing and performance bonus. I am assuming the base is around 65k then? This make sense then.

I'm assuming the 80k is without performance bonus. 70 + 10, plus a 10-15 performance bonus at year end.

Sep 5, 2013
TeddyTheBear:

So if 80k is total with signing and performance bonus. I am assuming the base is around 65k then? This make sense then.

No way is all in only 80.
Could be as high as 70 + 10 + 40

Product control and accounting policy positions can pay 80 all in straight out of undergrad. Risk has to be higher.

Sep 5, 2013

Ok if this were true, then a 1st year analyst in CR is making six figures. Hell this is more than 1st year in IBD. If these guys are really making this much money, why not just go for a CR job then. Aren't the hours less as well? Anyways I am confused now, I guess my perspective on CR was way off, I was honestly expecting all in much lower than what you guys are saying.

Sep 5, 2013
TeddyTheBear:

Ok if this were true, then a 1st year analyst in CR is making six figures. Hell this is more than 1st year in IBD. If these guys are really making this much money, why not just go for a CR job then. Aren't the hours less as well? Anyways I am confused now, I guess my perspective on CR was way off, I was honestly expecting all in much lower than what you guys are saying.

There's no reputable firm on the Street that's paying CR analysts more than IB analysts.

First-Year IB: 70 + 10-12.5 + 35-65
First-Year CR: 70 + 10 + 10-15

The reason why people choose IB over CR is because of the income trajectory. IB analysts are on a steep upward pay curve compared to CR.

Sep 5, 2013

Not actually worried about anything, just surprised. I was just curious to know since I rarely hear about CR.

Sep 5, 2013

Credit exit opps?

Sep 5, 2013

Really not sure why this is confusing to you...

Sep 5, 2013

confirming 1st year base 70k + 10k signing bonus. bonuses are definitely almost banking. my 1st year was 70k + 10k + 40k perf bonus (middle bucket), top buckets can hit 50k+ depending on which firm you're at for a 1st year.

and yes the hours are much better than banking. the exit opps, not as varied and open though.

Sep 5, 2013

credit exit opps = credit funds, credit research, mezz funds, distressed shops if you got a lot of high yield experience, restructuring banking, IBD

Sep 5, 2013

CR is also a great background for moving into FO LevFin where the comp is on par or better than IBD and also less cyclical.

Sep 5, 2013

I didn't know FO LevFin WASN'T IBD. Guess I should rethink my preftige ratings.

Sep 5, 2013

i think this depends on type of credit risk - if u r credit risk for the firm u basically manage their loans/invest for them, so salaries tend to b higher - credit risk for an ibanker is more like a credit analyst, which still pays well but a bit under ib

And ppl who talk about earnings trajectory...u do realize most ppl move out after 2 years so that's irrelevant.

"so i herd u liek mudkipz" - sum kid
"I'd watergun the **** outta that." - Kassad

Sep 5, 2013

Almost all MO functions pay like this, not just credit risk. Risk Management, Treasury, Corp Strategy, Legal/Compliance all pay $67.5-72.5k base depending on which BB you are at. Then there are varying compensation methods depending on the BB.

For example, some BB's pay OT after 40 hours for these positions but you do not get a year end bonus. Other's don't give OT but pay a bonus. Signing bonus is standard for these.

All-in, these positions average about $85k with certain groups being higher such as IB Risk or the Control Room.

Hours can range from 40 on the dot for something like country risk or trade surveillance to 70 for the higher compensated ones.

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Sep 5, 2013

Exit opportunities for CRM depend on what work you're exposed. Some banks house the function on the banking side and you're working with IBD on performing credit risk analysis on the deals that come through the respective industry groups. You'll be aligned just like they are and will routinely provide the terms by which IBD can move forward on deals (with respect to Credit terms). However, if you're aligned by products, you'll be working with/for Sales & Trading. That job tends to be much more process-based and operationally-heavy.

Exit opportunities on the industry-side are typically to banking or investment funds. But since the work that you're doing is tied to the bankers, you actually do have quite a few options after CRM.

However, coming from the product-side, your options may tend to be a bit more limited. You could move to Sales & Trading or some other capital markets role, but that's typically it. I haven't heard of anyone jumping ship and heading to a HF - unless of course it was a middle office role.

Sep 5, 2013

Sorry, forgot to mention - In this role, I'd be working with the Fixed Income Research team.

Sep 5, 2013

Bump

Sep 5, 2013

Credit risk is the bread and butter of rating agencies. If you're looking for a cushy job with about 150k and great benies after you get out, look no further than Moody's or S&P.

Sep 5, 2013

Debt Capital Markets would be a good change, so would doing flow trading for a debt desk -- a risk background is great on a desk. Have you explored opportunities internally within your bank? Feel free to send me your resume for a little more pointed advice...

Sep 5, 2013

This is a FT offer i just got, have not accepted yet. One of my worries is that its not exactly what I want to do and feel that there may not be enough movement after.

I'm graduating in May and don't have much time to decide on this offer, but i'm still in the process of interviewing with other firms. I don't want to turn it down and be left with nothing, but don't want to accept only to get a much better offer.

Sep 5, 2013

bump.

any input is appreciated.

Sep 5, 2013

At one BB that I am aware of, associate comp in CRM tracks IB comp because they are competing for the same group of associates. Base is the same; bonus may be marginally lower but not significantly so. Hours are better in CRM; it is very rare that you will be pulling all-nighters. At the associate level, expect 12-14 hour workdays with the occasional weekend work (once or twice a month, Saturday or Sunday but not both).

Not sure what comp and hours are at the VP level and above. I expect it to be lower, but not sure how wide the gap is.

Sep 5, 2013

What type of work do people in Credit Risk do?

Sep 5, 2013

Anyone work in CRM please PM me.

Sep 5, 2013

Never ever join CRM!

Sep 5, 2013

I've seen quite a few people make the move from credit to IB. It really depends on the job functions get to do in the credit department, as it can vary substantially.

Sep 5, 2013

You can definitely leverage the summer in Credit Risk. Make sure to network with the banking guys over the summer. Good luck!

Sep 5, 2013

Be glad you got an offer man! And yeah internal movement is possible with CR

I'm gonna get that bish some binary

Bishes love binary

Kind Regards,

Bin_Ban

    • 1
Sep 5, 2013

Also please....

.

stay safe

I'm gonna get that bish some binary

Bishes love binary

Kind Regards,

Bin_Ban

    • 1
Sep 5, 2013
Binary_Bankster:

Also please....

.

stay safe

well, ill be having a constant supply of cell-tech with me, so im sure all will be well

Sep 5, 2013

t.

Sep 5, 2013

Anyone know which industries are the hottest for credit activity?

Sep 5, 2013

It is less hours, dont know about type of work as haven't done it.

Sep 5, 2013

risk can work long hours

Sep 5, 2013

which bank? intern?analyst?associate?

Sep 5, 2013

GS intern

Sep 5, 2013

i think it is good, it seems to be a combined role.. ordinary credit risk mgt in addition capital structure and ratings advisory

at JPM/ML/Citi capstructure & ratings advisory is in IBD...

GS is currently ranked nr 1 for LBOs... I assume you will see many deals and gets lots of experience

I was told they work till 0300...no weekend off

Sep 5, 2013

What are your options once you start working full time in for example credit risk? In general: how easily do people move from one division to another? Is that even possible?

Thanks!

Sep 5, 2013

i know few traders that moved from Credit Risk Control to where they are now. It might be a good place to start, especially as an intern because it gives you a broad overview of different sectors of the bank. If there ever was such things as "middle office" I would say Credit Risk was it.

You want to be careful, however, because sometimes, when you work in credit, you become "the credit guy" and you don't want to be that guy, or you will be doing credit for the rest of your finance career. For some people that isn't as terrible as others might make it seem.

Their hours, from what I've seen really depend on the group and number of clients. I've spent time w/ an MBS and ABS group, and they were in at 8:30 out by 5:30. But the Hedge Fund Group was in at 9:00 and out around 7:00, on average, but all nighters are not uncommon.

Side note: Writing credit reviews can be extremely boring.

Sep 5, 2013

It's both financial statement analysis and corp. fin.

Basically, credit looks at the default risk of specific companies within each group. If the company has to do transactions or have deals with counterparties, they want to know the default risk so they can buy protection or somehow mitigate that risk.

Typical work for an entry level analyst would be similar to what an investment banker does, run over financial statements, a little bit of modeling, looking at company filings, and in general listening to your boss. Just maybe a little more in depth and not as deal-oriented.

Sep 5, 2013

I recently took an offer from a mid market commercial bank with 2 different credit groups. The first one seems more similar to what you're describing. I would like to know what the CRM description implies. Below are the 2 descriptions. Thanks.

Mid Market Bank

Business Credit
Business Credit is one of the nation's top senior secured lenders, utilizing clients' accounts receivables and inventories to provide flexible financing solutions. The Group serves middle market companies around the country and across a wide spectrum of industries with financing solutions ranging from $7 million to $250 million. We currently provide over $10 billion in financing commitments to more than 500 companies nationwide. Business Credit provides creative credit solutions to its clients, which include financing for working capital, growth, mergers and acquisitions, restructurings, recapitalizations, turnarounds, leverage buyouts and management buyouts.

CRM
Credit Risk Management Group works in conjunction with sales and product groups within the bank to understand, measure, price and monitor risk. The goal of the Group is to establish an appropriate credit risk environment; operating under a sound credit-granting process; maintaining an appropriate credit administration, measurement and monitoring process; and ensuring adequate controls over credit risk. Credit risk is not only managed at a transaction level but also as an entire lending portfolio.

Sep 5, 2013

bump

Sep 5, 2013

bump

Sep 5, 2013

.

Sep 5, 2013

you wouldn't happen to be GS CRMA woud you?

Sep 5, 2013

It's definitely possible. That's the route I went with last summer, networked like crazy, and ended up taking a MM IBD offer. I made my attempts to do an internal transfer to IBD within the same BB before realizing that I didn't really want to stay in the BB culture. Nevertheless, I networked a ton, got to know some of the staffers and many guys on the team - I wanted to make sure I kept my options open so I kept in contact even after deciding I didn't really want to work there. They ended up having a really tight headcount anyway and the team I was networking with didn't really do much (if any) FT hiring beyond SA return offers. I think that had they been hiring, I would have been on equal footing or better (given my familiarity with the guys on the team, work I had done on the CR side for the team, and my high internal MD recommendation/review).
Hope this helps.

Sep 5, 2013
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Biggest doofus in the business.