Over the past decade the UK’s financial services regulators have taken a tough line on companies that expose themselves and their customers to unacceptable risks. Whether it is rogue traders, mis-selling or infringement of European law, the penalties are fines, loss of reputation and, in the worst-case scenarios, insolvency.

The City of London is a tribute to the adage that wherever there’s a buyer and a seller there’s a market. Risk is no exception — it’s a commodity to be bought and sold — but the underlying mathematics, modelling and programming of forecasts are extremely complex and require the best brains from the top universities and business schools.

“The opportunities for jobs in risk are massive — it’s the biggest growth area in finance”, says James Lloyd-Townshend, a director of Hays, a recruitment company. “In recent years the Financial Services Authority [the chief financial regulator in the UK] has tightened all the rules on compliance and as a result every company has to take its risk exposure very seriously.”

One postgraduate with a doctorate in economic capital modelling who was head-hunted by a major bank, says: “Risk is an extraordinary market. The atmosphere is electric around here. It can be tough, though, and the hours are long if there’s a tight deadline, but right now I love it. I feel like I’m right at the centre of glo-bal financial markets and in the fastest-moving sector.”

Financial institutions that are recruiting analysts in regulatory and compliance risk tend to employ graduates with an accountancy, auditing or actuarial qualification or a background in a similar analytical discipline. Trainees can earn up to £38,000 with top employers; sometimes more. Institutions also look to risk consultants to identify weaknesses in systems and internal controls that could make a company vulnerable. Here, working for the risk consultancy arm of a major accountancy firm or a management consultant, starting salaries for trainees can be as high as £40,000.

Another important sector for employment is insurance and reinsurance. Here companies underwrite risk. In return for pledging to pay up if the worst happens, they can charge a hefty premium. Fire, theft, computer viruses and terrorist activities all come under general insurance. Then there are specialist markets like Lloyd’s of London — where you can insure virtually any commodity, asset, or behavioural or situational risk — which require highly specialised skills in each market.

Top insurers, reinsurers and banks take on many graduates each year as trainees, but are also keen to hire very bright mathematicians and computer scientists. Salaries are similar and often higher than for the accountants, while those with the right PhD and two or three years’ experience can command a salary in the region of £60,000 to £75,000.

According to the recruitment company Barclay Simpson, three of the top four UK banks each employ more than 1,000 staff in risk management, while the US, European and Japanese banks in London all have sizeable risk departments. “The prospects for graduates and postgraduates entering a career in risk management are better than ever,” says Matt Brown, a consultant with Barclay Simpson, which publishes the Risk Management 2007 Market Report.

“Many large financial services organisations now have graduate programmes exclusive to their risk departments. This is in part a reaction to the demand for risk staff over the past three years. The demand is expected to increase, so this is a great time to be looking to develop a career in risk management.”

Debbie Harrison is a senior visiting Fellow at Cass Business School. Read previous articles in the series at www.cass.city.ac.uk/thetimes

Next week: What it’s like working for a financial services regulator

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