Risk Management

Risk management is about identifying, analysing and responding to risk factors that affect the bank. Major risks faced by banks include credit, market, operational and liquidity risks. The risk management function is independent of the front office and has a direct reporting line to senior management and board-level committees.

Major job responsibilities

Policy setting/formulation

Develop a risk management framework.
Develop a control framework to reduce the possibility and potential impacts of adverse risk events.
Set and assign risk limits to teams, desks and individuals where applicable.
Put in place an internal audit function to review the controls.
For risks that cannot be controlled, set risk acceptance policies.

Risk analysis

Identify inherent risks.
Assess the risks in terms of likelihood and severity.
Develop an appropriate response or action plan.
Calculate exposure to each risk.

Communication

Communicate risk policies and processes.
Provide training and certification to bank staff.

Reporting and review

Report on risk exposures vs risk limits.
Use visual means to report on risks to senior management (charts, graphs, diagrams).
Prepare a report on qualitative factors.
Stress-test the system.

Relevant professional qualifications

Professional Qualifications under HKMA’s Enhanced Competency Framework:

Other banking qualifications issued by the HKIB:

Important skills and knowledge

Banking business and financial market knowledge

Thorough understanding of business goals
Knowledge of external markets
Understanding of the impact of climate issues
Product knowledge
Accounting policy knowledge

Data analysis skills

Financial modelling
Mathematical ability
Logical thinking and associative skills
Computer, data entry and MS Office skills
Strong attention to detail and organisation

Legal and regulatory knowledge

Solid, up-to-date knowledge of legal and regulatory requirements
Cross-border tax knowledge

Communication with staff and senior management

Excellent communication skills, written and spoken
Presentation skills
Negotiation and persuasion skills

A day in the life of a
Risk Management Specialist

Catch up with financial market news and social news to assess potential risk impacts.

Perform risk analysis, prepare risk reports, hold meetings with various departments and process owners to understand their risk issues and report on gaps in risk policies that need to be filled.

Prepare MIS reports and presentation decks of risk analysis.

Attend meetings with the board of directors to report on the risk position, and with external counterparts such as rating agencies and regulators to explain the risk level of the bank.

Conduct briefings for bank staff to communicate internal control requirements and promote risk awareness.

Keep updated on the legal and regulatory requirements and the latest risk management models and practices.

Typical career path

Risk specialists can move to other support functions, such as compliance, internal audit and financial control, or middle office roles like product control and valuations.

Senior risk managers can also move to the front line, especially assisting businesses that are not well controlled, have faced regulatory fines or are being exited.

Risk specialists tend to stick to their specialties; e.g. credit risk specialists do not move to market risk positions.

The most senior risk role is Chief Risk Officer, which is a board-level appointment.