Market Risk at Commercial Bank VS Ops Risk at MM

Hi folks,

I am choosing two spring part-time internships and will need to make a decision in a few days since both roles are starting soon anyway. Any feedback would be appreciated.

Offer 1: Market Risk role at a large regional commercial bank. However, it is non-traded and I'll be working mostly on liquidity stress testings (and MAYBE one interest rate risk and fx risk).

Offer 2: Operational Risk role at a well-renowned MM bank. I'll be working on operational risk management in the Commodity and Global Markets group and the day to day work involves working with data analysis and reporting across the trading desks - in addition to risk control projects.

Given that my end goal is in S&T or AM/HF, which offer should I take?

Also if it matters at all, here is my background summary.
1) 3rd year double majoring in Mathematics and Physics from target school in my country. I'm in a developed Asian country, think Japan, Singapore, HK.
2) Most recent internship is a winter gig at a commodity trading boutique, build machine learning models for price prediction (not so legit, it's a 2 ppl trading firm). Previous 2 internships at big reinsurance firms, actuarial roles.
3) No SA offer yet (messed up a few superdays, some waiting for results, some interviews still ongoing). SA hiring are delayed for some reason, even for some BBs.
4) I still have 1 chance to do off-cycle internship compulsary from school, starting spring 2021, so no SA from any BBs is not the end for me.

Thanks in advance.

Comments (6)

  • Trader in S&T - Other
Jan 25, 2020 - 4:44pm

IMO I think this scenario depends on how well you can network and build relationships. In the Ops Risk role it sounds like you'll be working directly with the trading desks so even if your day to day work is not super relevant to trading, at least you'll be able to make connections with the traders and leverage that to get onto the desk at some point.
If you're not confident with networking/building relationships then I would suggest the Market Risk role since the subject matter will be more relevant to trading. You can always try and move to the traded risk side in future and get a feel for the positions on the floor. Then hopefully make the jump to FO.
Overall, I think the Market Risk role is probably a less risky route to take, but it also might take you longer to achieve what you want.

Jan 25, 2020 - 11:52pm

Hey thanks for answering.

Well it's just a part-time spring internship so the goal is to leverage this experience to get a better one. So I guess the questions I shoudl ask are the following:

  • Is Non-Traded Market Risk management in a Commercial Bank very different than Non-Traded Market Risk in an Investment Bank? (I'd expect risks in the banking book of a Commercial Bank and Investment Bank are similar)

  • Would you say Non-Traded Market Risk (in the Commercial Bank) still beats Ops Risk (in the MM bank) purely in terms of it's subject matter relevance to trading?

  • If you're reviewing my CV as a trader, which one weighs more: Market Risk Intern at a large commercial bank or Ops Risk Intern at a renowned MM?

I'd say it's not so feasible to move to traded market risk since it's part-time and only for 3 months.

  • Trader in S&T - Other
Jan 26, 2020 - 1:25am
  • Market Risk (non-traded) between a commercial bank and investment bank will be very similar. Non-traded risk is basically balance sheet risk, so it's looking at liquidity i.e. Timing of cash flows and how liquid the assets are on the book. It also looks at how the assets and liabilities are affected by changes in interest rates. The assets are loans to clients and the liabilities are deposits from clients. Both commercial banks and investment banks have similar clients i.e. Businesses - they just differ in size. Some banks have retail divisions too, which take deposits and lend to everyday customers. The main point here is that you would analyze the non-traded risk the same for both commercial and investment banks, it's just that the magnitude of the numbers will probably be different.
    Lookup IRRBB, Banking Book Mismatch and ALCO for some more info. These are standard across all banks.

  • Market Risk will be hands down far more relevant for trading than ops risk. Even if it is non-traded. The most relevant area will be managing interest rate risk and the use of hedging instruments to mitigate this.
    Ops risk is looking at processes and finding areas of risk then applying controls - this is not relevant to trading at all.

  • A trader will definitely value Market Risk experience over any Ops Risk experience.

Jan 26, 2020 - 7:00am

It seems like the upside of being in Market Risk outweighs the networking opportunity in the Ops Risk role, considering the fact that this MM bank rarely hires offcycle interns, which is what I'm aiming for next spring in 2021.

I'm going for the market risk role. Thanks again.

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