The Pros and Cons of Working in Financial Risk Management

Summary

This video explores the role of a Financial Risk Manager, a career often overlooked in finance. Highlighting its intellectual and financial rewards, work-life balance, and lower stress levels compared to trading, the speaker shares insights from personal experience at JP Morgan and a hedge fund. They discuss the pros and cons, including job security, career progression, and the potential for less exciting tasks like regulatory work.

Takeaways

• 🏦 The role of a Financial Risk Manager is often overlooked but can be intellectually and financially rewarding with a good work-life balance.
• 🕒 Work hours in risk management are generally reasonable, with no late nights or weekend work, though crisis periods may require longer hours.
• 📉 Risk management is less stressful compared to trading roles, as risk managers are not directly responsible for the profit and loss of trades.
• 🔒 Job security is relatively high for risk managers, as their role is crucial in managing and mitigating risks, especially in unpredictable market conditions.
• 💼 Career progression in risk management can lead to senior roles such as managing director or chief risk officer, or transitioning to trading roles with enhanced market knowledge.
• 🛠️ The skills required for risk management are often acquired on the job, with a bachelor's degree in finance, economics, or a quantitative field being a good starting point.
• 📈 Risk managers use various tools and metrics like Value at Risk (VaR), stress tests, and the Greeks to analyze and monitor market risks.
• 🔍 The job involves interesting research and analysis, providing a top-down view of market activities and risks, which traders may not see.
• 📉 Some downsides include less exciting aspects like regulatory work, dealing with tech issues, and potential disagreements between traders and the risk team.
• 💰 Compensation in risk management may not be as high as in revenue-generating roles like trading, but offers a better work-life balance and less stress.
• 🌆 The role often requires living in major financial hubs with a high cost of living, which may not suit everyone's lifestyle preferences.

Q & A

What is the primary role of a Financial Risk Manager?

A Financial Risk Manager's primary role is to analyze and manage the risks associated with financial markets and trading activities, ensuring that the risks taken by traders are within acceptable limits and do not jeopardize the financial health of the institution.

Why might the work-life balance in a risk management role be better compared to other finance roles?

The work-life balance in a risk management role might be better because, unlike traders who may work late or on weekends due to market fluctuations, risk managers typically have more predictable hours and are not directly responsible for generating revenue through trades.

What are some of the less stressful aspects of working in risk management according to the script?

Risk management is less stressful because managers do not have to worry about overnight market movements impacting their portfolios or job security as much as traders do. Their job is not on the line with every market fluctuation, allowing them to have more peace of mind outside of work.

How does job security differ between risk managers and traders?

Job security for risk managers tends to be better than for traders. Traders' jobs are largely dependent on their ability to generate profits, which is highly unpredictable. Risk managers, on the other hand, have roles that are essential for the stability of the institution and are less likely to be affected by market volatility.

What are some common career progression paths for a risk manager?

Common career progression paths for a risk manager include rising through the ranks to become a managing director at a bank or a senior risk manager at a hedge fund, transitioning to a trading role, or moving into other parts of finance such as investment banking or asset management.

What kind of educational background is typically required for a role in risk management?

A bachelor's degree in Finance, Economics, or a quantitative field like Math or Statistics is typically required for a role in risk management. However, for more specialized roles, such as financial risk modeling or covering exotic derivative products, a quantitative graduate degree may be beneficial or required.

What are some of the key risk analysis tools and measures mentioned in the script?

Key risk analysis tools and measures mentioned include Value at Risk (VaR), stress tests, and the Greeks (Delta, Gamma, Vega, etc.). VaR measures tail risk, stress tests evaluate potential losses under specific market conditions, and the Greeks quantify an investment's sensitivity to various risk factors.

How does the role of a risk manager at a hedge fund differ from that at a bulge bracket bank?

At a hedge fund, a risk manager might engage in less regulatory work and more market-related research and analysis. They may also have the opportunity to develop tools directly useful to their team, which can make the role more interesting and rewarding compared to a similar role at a bulge bracket bank.

What are some of the downsides of a career in risk management mentioned in the script?

Some downsides include less exciting parts of the job such as regulatory work and dealing with tech issues, potentially lower compensation compared to revenue-generating roles, being limited to living in high-cost metropolitan areas due to the nature of financial hubs, and the perpetual tension between traders and the risk team.

How does the compensation structure differ between a bank and a hedge fund for risk managers?

In a bank, risk managers may receive a lower percentage of their base salary as a bonus compared to traders. At a hedge fund, compensation is more closely linked to personal performance and the fund's performance, which can result in larger bonuses but may also mean less guaranteed salary upfront.

What is the potential tension between traders and the risk team, and how can it affect the work environment?

The tension arises because traders are incentivized to maximize revenue, which may involve taking on more risk, while the risk team focuses on minimizing potential risks to the business. This can lead to disagreements, especially if a trade is deemed too risky by the risk team. However, a healthy balance is necessary to ensure both revenue generation and risk management.

Outlines

00:00

💼 Introduction to Financial Risk Management

The script introduces the diverse range of careers in finance beyond traditional roles like investment banking and hedge funds. It highlights the role of a Financial Risk Manager, which is often overlooked but offers intellectual and financial rewards with a balanced work-life approach. The speaker, having worked in this role for three years, including experience at a hedge fund, aims to provide insights into the role's pros and cons, focusing on work-life balance, job security, and career progression opportunities. The summary also mentions the importance of understanding the specific risk management functions and institutions one might work for.

05:01

📊 Skills and Responsibilities in Risk Management

This paragraph delves into the skills required for risk management, emphasizing that most are acquired on the job. It suggests a bachelor's degree in finance, economics, or a quantitative field as the educational baseline, with specialized knowledge being advantageous but not always mandatory. The speaker outlines the core responsibilities, which include analyzing trading risks using various measures like Value at Risk (VaR), stress tests, and the Greeks. The paragraph also touches on the interesting aspects of the job, such as market research and analysis, and acknowledges that the role can vary significantly depending on the specific function within the risk department.

10:02

🔍 The Pros and Cons of a Risk Management Career

The speaker discusses the less glamorous aspects of risk management, including regulatory work and technical issues that can arise. They also address the compensation structure, noting that while risk management roles may not offer the high bonuses of trading or sales, they provide better work-life balance and less stress. The script mentions the limited geographical options for such roles, typically in high-cost metropolitan areas, and the potential for tension between traders and risk managers due to differing objectives. The speaker shares personal anecdotes about their experience, including the culture of collaboration they appreciated in their department.

15:02

🤔 Conclusion and Personal Reflections on Risk Management

In conclusion, the script acknowledges the mixed bag of pros and cons associated with a career in financial risk management. It suggests that the role is suitable for those interested in financial markets and quantitative analysis, while also valuing a balanced lifestyle and lower stress levels. The speaker reflects on their own positive experience in the field, the knowledge gained, and the potential long-term benefits for their career. They invite further questions from the audience and express their readiness to address them in future content.

Keywords

💡Investment Banking

Investment Banking refers to a division of a bank that helps companies, governments, and institutions in raising capital by underwriting or acting as the client's agent in the issuance of securities. In the video, it is mentioned as one of the first things that come to mind when discussing careers in finance, highlighting its prominence in the industry.

💡Private Equity

Private Equity is an investment strategy that involves acquiring a company or a business unit with the intent to delist it from the stock exchange and take it private, with the aim of eventually selling it for a profit. It is listed alongside investment banking as a common finance career path, indicating the variety of roles available within the finance sector.

💡Hedge Funds

Hedge Funds are pooled investment funds that aim to generate high returns for their investors by actively managing a portfolio of assets. The speaker mentions working at a hedge fund, contrasting the experience with that at a bulge bracket bank like JP Morgan, to illustrate different work environments in the finance industry.

💡Financial Risk Manager

A Financial Risk Manager is a professional who identifies, assesses, and mitigates risks associated with financial transactions and markets. The video focuses on this role as an under-the-radar career in finance that offers intellectual and financial rewards, as well as a good work-life balance.

💡Work-Life Balance

Work-life balance refers to the equilibrium between an individual's work and personal life. The script emphasizes this as a significant positive aspect of a career in financial risk management, especially when compared to more demanding roles like trading.

💡Value at Risk (VaR)

Value at Risk (VaR) is a statistical technique used to measure and quantify the level of financial risk within a firm or investment portfolio over a specific time frame. The video describes VaR as a primary tool for analyzing a trading department's risks, showcasing its importance in risk management.

💡Stress Tests

Stress Tests in finance are simulations that determine how much an investment portfolio could lose if a certain market event occurs. The script mentions stress tests as a method to evaluate the impact of specific market moves on a portfolio, illustrating the proactive approach of risk managers.

💡The Greeks

The Greeks in finance refer to a set of risk measures used to understand the sensitivity of the price of derivatives to underlying parameters. The video script uses 'Delta, gamma, vega' as examples of the Greeks, indicating their role in assessing risk in financial portfolios.

💡Job Security

Job security denotes the likelihood of continued employment and job stability. The script highlights job security as a benefit of being a risk manager, as their role is less dependent on market performance compared to traders.

💡Career Exit Opportunities

Career exit opportunities refer to the potential paths one can take after leaving a particular job or industry. The video outlines several career progressions for risk managers, such as becoming a managing director or transitioning to a trading role, indicating the versatility of the skills acquired in risk management.

💡Regulatory Work

Regulatory work involves tasks related to ensuring compliance with financial regulations and reporting requirements. The script describes regulatory work as a less exciting aspect of the risk management role at a bank, involving tasks like preparing reports for the Federal Reserve.

💡Compensation

Compensation in the context of employment refers to the financial and non-financial rewards an employee receives from their work. The video discusses compensation as a trade-off in risk management roles, where potentially lower pay is balanced with better work hours and less stress.

💡Market Risk

Market Risk is the risk of losses that may occur due to movements in market variables such as interest rates, foreign exchange rates, equity prices, and commodity prices. The script explains that market risk managers actively analyze and monitor these risks, which is central to their role in financial institutions.

💡Educational Barrier to Entry

Educational barrier to entry refers to the level of education or specific qualifications required to enter a particular profession. The video suggests that risk management does not have a high educational barrier, as many necessary skills can be learned on the job.

💡Monte Carlo Simulation

Monte Carlo Simulation is a mathematical technique that allows for the modeling of the probability of different outcomes by running multiple simulations. The script briefly mentions this method as a way to determine VaR, indicating the use of advanced statistical techniques in risk management.

💡Tension Between Traders and Risk Managers

The tension between traders and risk managers is a natural conflict of interest where traders aim to maximize revenue while risk managers aim to minimize potential losses. The video script describes this tension as a perpetual issue in the finance industry, with varying degrees of impact depending on the team and institution.

Highlights

Finance offers diverse career paths beyond traditional roles like Investment Banking, private Equity, and hedge funds.

The role of Financial Risk Manager is often overlooked but can be intellectually and financially rewarding.

Financial Risk Managers balance work and personal life, with a typical workweek of around 50 hours.

Risk Management roles at bulge bracket banks like JP Morgan and hedge funds offer different experiences.

Work-life balance in Risk Management is a significant positive, with no late nights or weekend work typically required.

Risk Management is less stressful compared to trading roles, offering more job security.

Risk Managers have good job security as their role is crucial in managing market unpredictability.

Career progression in Risk Management can lead to senior roles like managing director or chief risk officer.

Risk Managers can transition to trading roles, leveraging their market knowledge and risk analysis skills.

Risk Management roles require a broad skill set, including both qualitative and quantitative skills.

Educational barrier to entry in Risk Management is not very high, with a bachelor's degree in finance or a related field being sufficient.

Risk Management involves analyzing trading risks using tools like VAR, stress tests, and the Greeks.

The work in Risk Management can be interesting, involving market research and analysis.

Some Risk Management roles can involve less exciting tasks like regulatory work and dealing with tech issues.

Compensation in Risk Management may not be as high as in revenue-generating roles like trading or sales.

Risk Managers are often limited to living in high-cost metropolitan areas due to the nature of financial hubs.

There can be tension between traders and risk teams, as their incentives and focuses differ.

Risk Management is a good career choice for those interested in financial markets and quantitative concepts, seeking a balanced lifestyle.

Transcripts

when you think of careers in finance the

first things that probably come to mind

are Investment Banking private Equity

hedge funds those sorts of things but in

truth Finance is such a large field and

there's so many different avenues that

you can take depending on your skills

and your interests so in today's video

I'll be going through what I personally

think is a role that sort of goes under

the radar when people talk about Finance

careers but one that can still be

intellectually and financially rewarding

and offers a great balance between work

and your personal life the role I'm

talking about is the Financial Risk

manager and is the role that I've been

lucky enough to get straight out of

college and I've been working in for the

past 3 years now I did make a video on

what a risk analyst does in the past

which I highly suggest you check out

after this video but since making that

video I've worked almost a year at a

hedge fund so I'll be able to give you

guys insights on what the role is like

both at a bulge bracket Bank like JP

Morgan and also at a hedge fund and in

this video I'll also be breaking down in

a more clear-cut fashion exactly what

the pros and cons are of this rule so

that you can better determine if this

role will be something you'll be

interested in or if it's a good fit for

you and to clarify today I'll be talking

about risk management as it pertains to

the financial markets and managing the

risks of Traders whether it's at a bank

or at a hedge fund starting off with the

pros the work life balance you get

working in risk management is probably

one of the biggest positives when I

first started working at JP Morgan right

out of college I used to get to the

office at 7:00 a.m. because I had to get

on a call with the Traders and take

notes for rmd I would also leave the

office around 6:00 p.m. because I had to

send an endof day email that summarized

our risk and p&l and that data was only

available after a certain time however

this was when I first started out as an

analyst and I wanted to contribute as

much as possible but as time progressed

I started to split these

responsibilities with my teammates and

then my days started looking more like 8

to6 or 8 to 5 so more so around that 50h

hour mark but really no more than that I

never had work late at night or on

weekends but I will offer a caveat to

this by saying that I did Cover

municipes which is a much smaller Market

compared to say the equity Market or the

bond market so for example when Russia

first invaded Ukraine back in February

of 2022 a lot of my colleagues working

in those departments had to put in some

long hours some late nights to finish

some deliverables for Senior Management

while I basically saw no change to my

schedule but essentially depending on

the market you cover during crisis

periods your hours might be longer given

you are the risk team after all on the

headphon side my hours are pretty

similar I'm also putting in about 50

hour weeks and was never required to

work at nights or on weekends but again

that can potentially change during

periods of extreme volatility in the

markets the second Pro is that risk

management is not really a stressful job

relatively and I say relatively because

most finance jobs can be quite stressful

especially when billions of dollars are

on the line you're working long hours or

there are slew of deadlines to hit but

compared to say traders who are actually

making the trades and taking on that P&O

risk and subsequently putting their jobs

on the line risk management is a lot

less stressful instead of going home at

night worried about what might happen in

the markets overnight or the very next

day that might negatively impact your

portfolio and potentially cost you your

job I can go home and sleep soundly

knowing that my job won't necessarily be

on the line if the market moves

adversely this brings me to the next

positive which is that Risk Managers

tend to have good job security if you're

actually conducting ing trades your job

is largely dependent on surprise

surprise your ability to make money

after all this is the finance industry

but given how markets are extremely

unpredictable if you're not properly

managing a risk one mistake could cause

you to fall below your Pano limits and

the next thing you know you'll be

dusting off your resume now this is a

problem I mostly observed with hedge

funds since strict banking regulations

usually Force Traders at Big Banks to

hedge out their directional Market risk

which means they won't be as severely

impacted whether the market goes up or

down har don't F around cover that risk

now but the point still stands that risk

management is not a job where either you

perform and make money or get replaced

obviously there are other ways to judge

the value and performance of a risk

analyst but making trades is not one of

them not to mention risk management

rules do tend to stay pretty resilient

in all stages of the economic cycle

during boom periods when the economy is

doing well Banks might want to hire more

traders to increase their revenue but as

soon as the economy turns sour and

companies need to start cutting expenses

fast these roles that were added during

the expansionary period would likely be

the first to go whereas risk management

functions tend to be the last to go if a

bank is looking to downsize their

headcount the fourth positive is that

risk management can offer some pretty

good career exit opportunities if you're

looking to change things up there are a

few common trajectories the first being

naturally Rising through the ranks and

becoming a managing director at a bank

or a senior risk manager at a hedge fund

and if you really stick with it for the

long run you can become the chief risk

officer of an organization the second

most common that I've seen is

transitioning to a trading rule as a

risk manager you will learn a lot about

the market or markets that you're

covering such as what drives that market

what products are traded in that market

what are the risk metrics associated

with it and much more and because you

develop this knowledge base surrounding

a particular Market you become a natural

choice for trading desks if they're

looking to expand their team especially

when the job market is tight and talent

is harder to come by these two paths are

generally the most common I've seen but

I've also seen risk analysts transition

to other parts of Finance such as

Investment Banking asset management or

even going back to school to get their

MBA or master's degree at a top business

school the bottom line is that risk

management is a career path that teaches

you about many aspects of finance and

markets while developing both

qualitative and quantitative skills

which will prepare you well for a number

of opportunities both in and outside of

Finance speaking of skills I would say

that risk management does not have a

terribly High educational barrier to

entry in fact most of the skills I have

now whether it be coding in python or

using Excel or knowledge about the

financial markets have been accumulated

while I was on the job and prior to

receiving my job I only had two

internships which didn't give me a whole

lot of hands-on experience and I took a

few finance courses as part of my

finance major in college to get a role

in this field I think all you really

need is a bachelor's degree preferably

in a major like Finance or economics or

in something quantitative like math or

statistics I will say though that there

are certain parts of risk management

especially when you start getting into

Financial Risk modeling where you need

some sort of quantitative degree like

Financial engineering or if you want to

cover a certain group like exotic

derivative products for rates or Equity

trading teams a quantitative graduate

degree can definitely help your chances

if not being an outright requirement for

the

job the last positive I want to talk

about is the work itself and generally

speaking it can be pretty interesting at

a bank you have a few main

responsibilities the first is to analyze

your trading Department's risks using a

number of different risk measures and

tools but mainly VAR stress tests and

the Greeks such as Delta gamma Vega Etc

to briefly explain what those two tests

I just mentioned are VAR stands for

value at risk and basically tells you

your tail risk or how much money you

stand to lose given a very rare Market

move for example say you have a $100

million portfolio and your 95% ofar is

2% that stat is essentially saying

according to the model you can expect

your portfolio to lose $2 million about

5% of the time you can change certain

parameters to your preference such as

the confidence level aka the probability

in which you expect a certain loss you

can also choose to use historical data

for your VAR tests or use a Monti Carlo

simulation to determine your VAR for

potential future values of your

portfolio point is there are many

different types of VAR tests and

different firms will elect to use

different tests depending on what they

want to monitor as for stress tests

these are tests that show how much you

stand to lose given a specific ifed move

in a certain Market as a simple example

if you have a stress test of the S&P 500

going down 10% it will show you how your

portfolio is expected to react to the

move given the correlations between

different assets for example if you have

Apple stock in your portfolio that might

move a lot given a 10% move in the S&P

500 but a less correlated asset like

gold will likely not move as much now

this can be very interesting because

this is a side of the business that

Traders don't necessarily get to see

Traders can only see their own positions

but the RIS team are able to see a top-

down view of everything that's going on

from trades being made to p&l to risk in

addition to analyzing risks some of the

more interesting work involves doing

research an example of this was when I

was covering municipes at JP Morgan and

I was tked to do some research on a very

specific type of Municipal Bond one that

my team was not very familiar with and

analyzed the potential risks behind it

in my current role one of my research

focused tests have been to try to come

up with better stress tests to more

accurately model curve shifts in the US

Treasury Market now everything I just

mentioned are some of the more

interesting parts of the job but there

are certainly some less exciting Parts

as well which I will will get to in the

negatives list also given all this I

will offer a caveat and that is it

depends on what risk management function

and what type of institution you work

for risk management is still quite a

broad term and there are functions

within the risk Department that I would

personally consider less interesting

when I was working on the cell side at a

bank I was within a function called

Market risk and as the name suggests you

cover the market risk of a certain asset

class and are in charge with doing more

of the active analysis and monitoring of

the risk but there were other teams that

we worked with that were in charge of

tasks that were less related to the

market such as publishing reports to

send to the FED checking over regulatory

documents and spreadsheets and things of

that nature essentially risk management

can be a broad term at a big bank so

it's important to go into the details to

determine exactly what part of the risk

function it is that you're signing up

for while risk management at a bank did

have its moments I currently prefer my

role working at a hedge fund much more

because I think the work is a lot more

interesting and rewarding I find myself

doing virtually no regulatory work which

is quite a boring part of my previous

job I'm doing a lot more Market related

research and Analysis and I'm also

learning how to code and develop tools

that can be directly useful to my team I

should go into some more detail

regarding the differences between these

two rules in this video so go check that

out after this video if you're curious

about

that okay now that we've gone through

the positives it's time to talk about

some of the parts of this job that I

wasn't too thrilled about as I mentioned

before a big downside was that there

were big parts of the job that were less

exciting for me that was mainly doing

regulatory work and dealing with tech

issues as for the former at a large Bank

the risk department is in charge of

working with The Regulators to make sure

that the bank isn't taking on too much

risk and one thing we had to do

quarterly was something called c car or

comprehensive Capital analysis and

review which was essentially a quot of

the exercise in which the entire risk

Department had to compile a bunch of

data to then send to the FED which they

reviewed in order to basically make sure

that the banks had enough Capital to

sustain losses under a number of

different extreme Market moves

essentially this involved collecting a

bunch of data and compiling it into a

pretty complex template now that may not

sound like it would take that long but

when you have a portfolio consistent of

hundreds of different bonds options

credit derivative products it can be

very timeconsuming to compile all that

information as we're dealing with tech

issues this also was a part of the job

that I wasn't particularly fond of

essentially ever so often when we're

going through our daily processes we

might find some risk numbers that don't

quite look right in which case we'd have

to go in and investigate and try to

figure out the issue now sometimes it

could be as simple as the data not being

sent through on time or something like

that but other times there would be an

issue with the underlying risk model

that is calculating the risk statistic

in these cases we' have to reach out to

risk Quant teams to fix the model then

run the data and see if that fixes the

issue and this consisted of a lot of

back and forth comparisons with

spreadsheets slicing the data in a bunch

of different ways which all around

wasn't very interesting but it had to be

done second biggest drawback is the pay

and it really only is a downside

depending on how you look at it now

obviously since the risk Department

isn't a revenue generating part of the

business as in directly bringing in

clients or making trades the

compensation isn't going to be as high

as a role like trading or sales now on

the flip side your hours will be better

and you won't be as stressed so there is

that trade-off to keep in mind for a

bank the main difference in compensation

lies in the bonus in the year and a half

that I worked at a bank the salaries

across the trading FL were pretty much

equal from the salespeople to the

traders to the risk team while Traders

could potentially earn somewhere from 50

to 100% of their base salary in bonus

the numbers I saw for the risk team were

more around 25 to 50% now these numbers

will tend to fluctuate a lot depending

on personal performance and the economic

environment I have heard of some where

trading desks paid out much lower

bonuses than the percentages I mentioned

but in those cases the risk team will

probably be even lower at a hedge fund

compensation is treated a bit

differently and is much more closely

linked to personal performance and the

performance of the fund so while

salaries may not be as big as the banks

bonuses are typically larger ultimately

while some may view the lower overall

compensation as a negative others might

value the extra free time and the less

stressful lifestyle so it all comes down

to personal preference at least for me I

know one thing which is if I work those

100 hour weeks as a banker I certainly

wouldn't be able to film and edit these

videos this next one is also sort of a

neutral Factor but I chose to put it on

the cons list because I personally saw

it as a con and that is you really are

limited on where you can live if you

decide to go into this field and by

limited I mean you'll most likely be

living in New York City or another major

city now there are Financial hubs in

Chicago San Francisco Miami or if you go

internationally London Hong Kong Etc but

essentially you'll most likely be living

in a High Cost of Living metropolitan

area which isn't the ideal lifestyle for

everyone in my first year of working I

tried my best to not have to live inside

of New York City and instead opted to

live in a small town in Connecticut but

after a whole year of waking up at 5:00

a.m. taking a 1 and 1 half hour train

and then getting back home at 8800 p.m.

I had finally had enough and decided to

move into the city only when I got there

I realized that a $120,000 salary really

doesn't go that far in New York city so

location can definitely be a major

downside especially if you're trying to

save money or don't particularly like

City life because when it comes to jobs

in the finance industry your options can

be quite

limited this last negative which

probably is something that you haven't

thought about is that there does tend to

be a Perpetual tension between the

Traders and the risk team where the

former group are incentivized to

generate as much revenue as possible

without thinking too much of the tail

risks while the risk team only focuses

on what potential risk the trading

business can expose themselves to and

prevent that from getting out of control

this is by Design after all you do need

some healthy tension and discourse in

order to maximize Revenue while also not

taking on risks that could risk

destroying the whole business but the

key word is healthy and it varies team

by team Bank by bank but sometimes there

can be situations where Traders want to

conduct a trade that the risk team deems

to be too risky and that can result in a

disagreement I've even heard stories

from more senior Risk Managers that

fights have almost broken out on the

trading floor because of these very

reasons essentially some desks can have

better relationships between the Traders

and the Risk Managers and some desks can

have worse relationships luckily for me

when I was covering municipals the two

heads of the Department were very good

Traders they paid a lot of attention to

risk and as a result we had a very good

relationship the Traders and our team

would go out to a baseball game once in

a while during the holidays some of the

senior department heads would take us

out to a nice lunch to a steakhouse

somewhere and I was just very

appreciative of this culture of

collaboration rather than antagonism and

this is all something that I've seen

more so working at a bank than at a

hedge fund and again these bad

relationships between these two

functions don't happen terribly often

but it is

possible so in conclusion like any other

job the role of the Financial Risk

manager has both its positives and its

negatives and it really comes down to

what you're looking for out of your

career and your life ultimately I think

risk management is a good choice for

anyone that enjoys and is interested in

working in the financial markets likes

to dive deep into certain markets and

quantitative Concepts but also wants a

good work life balance and a low stress

lifestyle now I'm not saying that I'm in

this role for specifically those reasons

but I certainly am grateful to have

started my career in this field and I've

learned a tremendous amount that I'm

sure I will take with me for the rest of

my career if you guys have any further

questions please do leave them down in

the comments below I'll try to answer

them the best I can or I'll address them

in a future video and as always take

care I'll see you guys in the next

[Music]

one