Introduction and overview
As many companies and economies emerged from the challenges and restrictions of the COVID-19 pandemic, 2022 saw significant activity within risk management functions. In light of this, Profile surveyed a range of risk professionals across the Asia Pacific region to better understand the current trends and opinions on a multitude of topics including hiring, market concerns and diversity progress.
24% of respondents consider themselves to belong to a diverse or underrepresented group
Sentiment
Overall, sentiment within the risk function improved in 2022. Almost half (48%) of respondents said they feel the function is more valued than it was 12 months ago compared with 17% who feel the function is now less valued. Similarly, nearly 45% feel the risk culture across all three lines of defence has improved versus 12% who feel it has deteriorated. With several headwinds expected in 2023, risk functions will increasingly be called upon to manage new and challenging situations. Therefore, the perception of, and value placed upon, risk management will only continue to grow in importance. As one respondent noted, “in light of the current situation, people are more aware of the contribution from their risk colleagues”. Exactly how these challenges materialise and evolve remains to be seen, however, confidence among the risk management community continues to be relatively high, with 58% of respondents either somewhat confident, or very confident, in the function’s ability to weather the challenges of the coming 12 months.
Diversity, equity, inclusion and belonging (DEIB)
Diversity, equity, inclusion and belonging is still a major consideration for risk management leaders (as well as wider business leaders) and the conversation in Asia continues to evolve beyond gender and into other areas including disability, ethnicity and sexual orientation. For many hiring managers, improved diversity of the risk function is no longer just a desired outcome but a must-have with concerted efforts during the hiring process focused on ensuring a diverse shortlist of candidates are presented and interviewed. That is not to say that there haven’t been challenges in maintaining the positive momentum seen in this space, with COVID-19 and associated external pressures impacting the ability to improve diversity initiatives as much as desired. In fact, 24% of respondents felt that in light of the external challenges the organisation and risk function have faced, they have not been able to dedicate as much resource to their diversity initiatives.
Location strategy
There were plenty of headlines – and even more behind the scenes conversations – throughout 2022 as to the evolving location strategy of businesses across APAC. As a result, we have seen a shift in favour of Singapore versus Hong Kong both in terms of strategic importance and hiring activity, as can be seen later in the report.
However, with an evolving COVID-19 strategy and the associated reopening of Hong Kong, it will be interesting to see if the city will be able to attract new and returning talent and recoup some of the skills it lost during 2022. Equally, with the cost of living increasing significantly in Singapore, inward migration may dwindle during 2023 as the economic benefits of working in the city state become less evident.
Elsewhere, Mainland China ranks as the third most strategically important location for respondents followed by Australia & New Zealand and India a more distant fourth and fifth respectively. Japan continues to operate as something of a satellite location, with Asia ex-Japan operating models observed in many organisations.
Around 9,400 permanent roles were expected to have been created in Singapore in 2022, according to a report by PERSOLKELLY and government agency, SkillsFuture Singapore.
Operating structure
The operating model of risk functions and their relationship with compliance continue to evolve in many organisations, albeit not at the same pace as we have seen historically. Nearly half (43%) of the respondents noted that risk and compliance now operate as either a fully, or partly combined function.
Trends and challenges
With myriad external developments and challenges increasing the pressure on risk management functions, it is no surprise that we have seen an increase in focus upon a range of new and emerging risk types. For example, climate risk has now gained a foothold in regional functions. Some 62% of respondents said their organisation now has a dedicated ESG/climate risk lead versus 14% who expect one to be appointed next year and 24% who don’t believe their organisation plans to appoint one in the coming 12 months. Other risks cannot be overlooked and the expected economic headwinds for the year ahead mean risk types such as credit risk, technology risk and political risk remain significant areas of potential concern.
The aforementioned challenges that risk management functions are likely to face over the coming 12 months are broad and will evolve throughout 2023, however, the top five challenges include:
1. Economic pressures
2. Geopolitical developments
3. Talent shortages
4. Cost pressures
5. Increased market/price volatility
Talent and hiring trends
2022 saw significant hiring activity across the APAC risk management market with many firms and functions capitalising on reduced COVID-19 restrictions and subsequent improved market conditions in most locations. A detailed review of the people moves made throughout 2022 can be found on page seven. The picture for 2023 looks mixed, however, with just over a third of respondents indicating that they expect headcount in their risk functions to increase over the next 12 months.
Hiring in 2023 is expected to remain focused on emerging risk types with climate risk and technology risk roles the most likely to increase. Conversely, enterprise risk was the most expected to witness a reduction in headcount.
Beyond the range of geopolitical and fiscal pressures that risk functions will face during 2023, one of the biggest challenges to their growth and success is finding the right talent. 83% of respondents feel at least somewhat concerned about the current shortage of talent in the region while 37% expect they will have to adjust their talent attraction and hiring practices as a result.
Identifying talent with skillsets that go beyond the requisite technical knowledge is of course not a new practice, but we are continuing to see increasing emphasis put on behavioural and cultural fit during the interview process.
TOP 5 GROWTH RISKS
1. Climate risk
2. Technology risk
3. Operational risk
4. Investment/portfolio risk
5. Market risk
TOP 5 CONCERNS FOR HIRING MANAGERS
1. Fundamental skills shortages
2. Budget constraints
3. Competing job offers
4. Interpersonal/soft skills
5. Speed of hiring processes
TOP 3 ATTRIBUTES HIRING MANAGERS LOOK FOR
1. Stakeholder management
2. Ability to influence
3. Willingness to embrace change
People moves analysis
Overall, 2022 saw an increased level of activity, especially in the first half of the year as firms battled to add headcount and improve skillsets in certain areas following two years of muted activity during the COVID-19 pandemic.
Activity was seen to be higher in Singapore in both buy-side and sell-side institutions as the city state capitalised on greater restrictions and uncertainty in Hong Kong to attract overseas talent.
We saw a greater level of activity for gender diverse candidates, with this accounting for 36% of people moves in 2022 versus 24% in 2021. There was very little difference observed in the diversity of people that moved across Hong Kong and Singapore.
Non-financial risk and some emerging risks continue to see the greatest mobility of gender diverse talent while risk types such as credit, market and technology continue to see male talent making up well over 50% of the observed moves.
Credit risk notably stood out as the most active risk type for hires and internal moves. Credit risk has previously been one of the more stable risk types in this regard, however, significant uncertainty in areas such as China real estate has forced banks to increase (or upgrade) their headcount and capabilities.
2022 also saw a notable increase in the number of external moves as candidates’ appetite to move to another firm increased with the improved market conditions and hiring managers subsequently capitalised on the greater levels of strong talent in the market. Overall, 65% of the observed people moves across buy and sell-side were external.
In the buy-side, we saw a significant focus on hiring investment and portfolio risk professionals, both into existing teams and newly created functions.
*This analysis applies to observed people moves within the second line of defence at major financial institutions across Hong Kong and Singapore, at the VP (Vice President) level (or equivalent) and above.
Looking ahead
It is reasonable to expect that 2023 will look noticeably different to 2022 as wider market sentiment weighs down on risk functions across the region. While there remains cautious optimism for many risk professionals for an improvement in economic conditions, many firms and risk functions are bracing themselves for a turbulent 12 months ahead. This will mean not only difficult day-to-day management of risk, but also challenges within the hiring market. We expect total hiring levels across the region to be reduced compared with 2022 and for candidates to remain active in their searches, but to become increasingly selective in the opportunities they pursue – as was the case in 2020 and 2021. As such, hiring managers will need to ensure their talent attraction strategies and recruitment processes are optimised so that they can capitalise on the best talent.
Beyond the challenges, there are also several opportunities for the risk function to develop and operate more effectively, and those that adapt best will be best placed to manage the coming 12 months:
1. Improved synergies across risk and other functional areas
2. Greater collaboration across all three lines of defence
3. New and emerging technologies
About the author
Jonny Warner brings a decade of executive search experience to the team executing mandates in London and across Asia. He is a specialist within infrastructure/corporate functions with a particular focus on risk management, finance, operations and technology.
Prior to Profile, Jonny worked at a leading search firm in its Hong Kong and London offices delivering senior level mandates across the region. Outside of work, Jonny’s passion to reduce ocean plastics led him to establish Deep Blue Straws as part of his mission to replace plastic straws with environmentally friendly alternatives.
If you wish to discuss any of the observations in this report, please don’t hesitate to reach out to Jonny.
Key contacts
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Jonny Warner
Associate Director
+852 3589 6820
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Stanley Teo
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steo@profileasia.com
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Andy Zhi
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Nicolas Rumebe
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