• C++ Programming for Financial Engineering
    Highly recommended by thousands of MFE students. Covers essential C++ topics with applications to financial engineering. Learn more Join!
    Python for Finance with Intro to Data Science
    Gain practical understanding of Python to read, understand, and write professional Python code for your first day on the job. Learn more Join!
    An Intuition-Based Options Primer for FE
    Ideal for entry level positions interviews and graduate studies, specializing in options trading arbitrage and options valuation models. Learn more Join!

Risk Management,bad job for a mfe graduate?

Joined
9/25/14
Messages
45
Points
18
Hi, I heard something negative about risk management. Such as the income is low, even lower than that of IT guys sometimes. They do not have many exit options. They are not valued by business schools if they want to go for an MBA. Are they all true?

Then what is the upside of it?
 
I think it is hard to generalize. Yes, there are IT guys who bag more than a risk manager, but you also have risk managers who make x-times more than IT guys. As to risk managers' value from B-schools' standpoint, again, it totally depends on applicants' full pack (GPA, work experience, ECs, GMAT etc.). Check out student profiles at different schools.

Is there an upside? Indeed, only if you want to see.
 
Such as the income is low, even lower than that of IT guys sometimes.

As far as salaries go, my general impression is that for entry-level risk positions right out of MFE (with no prior work experience except for possibly an internship or two), the salaries tend to be somewhere in the $70-90k range, and with a few years of relevant full-time experience prior to MFE, including a 10-20% bonus it'll be more like $100-120k... whether that's "less than IT guys sometimes" depends on how we're defining IT here-- a top C++ developer for a prominent hedge fund can pull in $300k+/yr, an entry-level DBA for a no-name can make $45k.

They do not have many exit options.

I don't know that I agree with this, but while curious, I can't claim to be particularly knowledgeable... for things like banking and trading, exit ops tend to matter because except for the complete animals, most people tend to burn out after a few years and don't have much choice but to move on to something else. For risk, the goal of pretty much everyone ambitious in it tends to be to make it to the front office somehow with some kind of portfolio management gig, but if that doesn't happen, the chances of burning out I think tend to be pretty low and worst comes to worst you can just stay in risk, work your way up the ladder, try to be CRO someday, and while a seven-figure salary won't happen, you'd still be making a very comfortable living with (from a relatively standpoint) not much stress.

They are not valued by business schools if they want to go for an MBA.

I've never heard of anyone finishing an MFE, working for a few years, and then wanting an MBA... so I can't really comment on this.
 
Last edited:
For risk, the goal of pretty much everyone ambitious in it tends to be to make it to the front office somehow with some kind of portfolio management gig

This is a slight threadjack, but I have always been interested to know more about this kind of transition. What would be your plan for this?
 
Last edited:
This is a slight threadjack, but I have always been interested to know more about this kind of transition. What would be your a plan for this?

I'm in MFE now, but I just did an entry-level buy-side risk job for a few years... while I think it tends to depend on the firm, at mine we generally had a good amount of exposure to the PM's, so the general routine for a risk ---> front office transition was to do your job, do it well, build a reputation for being an extremely solid/smart/reliable/good-natured person, go out of your way to become personal friends with all the PMs (absolutely critical), and then if there was ever an opening for an "assistant PM" sort of thing and they were dreading having to deal with the sleazy external recruiter and a multiple month search, sweet-talk your way into getting it... I don't know how it would work for sell-side, though-- transitioning from something like "market risk manager" at a bank into trading is known to be much tougher now from what I've heard.
 
I'm in MFE now, but I just did an entry-level buy-side risk job for a few years... while I think it tends to depend on the firm, at mine we generally had a good amount of exposure to the PM's, so the general routine for a risk ---> front office transition was to do your job, do it well, build a reputation for being an extremely solid/smart/reliable/good-natured person, go out of your way to become personal friends with all the PMs (absolutely critical), and then if there was ever an opening for an "assistant PM" sort of thing and they were dreading having to deal with the sleazy external recruiter and a multiple month search, sweet-talk your way into getting it... I don't know how it would work for sell-side, though-- transitioning from something like "market risk manager" at a bank into trading is known to be much tougher now from what I've heard.

Pretty interesting.
If my memory serves well, you are at Columbia, right?

Can you talk little bit about your buy side risk gig?
How did you land this job (OCR, online application, HH, etc.)? What products did you cover? Why did you quit? Would you go back?
 
As far as salaries go, my general impression is that for entry-level risk positions right out of MFE (with no prior work experience except for possibly an internship or two), the salaries tend to be somewhere in the $70-90k range, and with a few years of relevant full-time experience prior to MFE, including a 10-20% bonus it'll be more like $100-120k... whether that's "less than IT guys sometimes" depends on how we're defining IT here-- a top C++ developer for a prominent hedge fund can pull in $300k+/yr, an entry-level DBA for a no-name can make $45k.

What I will say is basically based on hearsay and gossip. Except that people do tend to talk and compare/contrast quite often on Wall St. I'm going to talk about IBs, as I think they are responsible for a lot of the rumors through the sheer size of their hirings and firings.

My impression is that entry-level risk at an IB is around 70-80k and entry-level IT at an IB is about 80-90k. This is for people with little to no experience and a master's. These are averages of course. I happen to know entry-level people at some prestigious bulge-brackets that are below this average, while some at large middle-market banks make more. I'd hate to generalize, except to say that I do think there is a prestige premium and negotiation skills can matter.
 
Pretty interesting.
If my memory serves well, you are at Columbia, right?

Can you talk little bit about your buy side risk gig?
How did you land this job (OCR, online application, HH, etc.)? What products did you cover? Why did you quit? Would you go back?

 
Hi, I heard something negative about risk management. Such as the income is low, even lower than that of IT guys sometimes. They do not have many exit options. They are not valued by business schools if they want to go for an MBA. Are they all true?

Then what is the upside of it?

First of all, "bad job"? Is the quality of the job solely based on income? Forget Risk Management, let's compare Risk IT and the most coveted job on Wall Street, Investment Banking:

Risk IT, Analyst level
Entry Difficulty: Moderately Easy
Job Pressure: Medium/Low
Pay: $75k post bonus
Hours/Day: 9
252*9 = 2268 hours/year
$75k/2268 = $33/hour

Investment Banking, Analyst Level
Entry Difficulty: Insane
Job Pressure: Very High
Pay: $140k post bonus
Hours/Day: 18
252*18 = 4536 hours/year
$140k/4536= $31/hour


Excluding future career, IT gets paid more per hour, has much less stress, and has a much easier time finding a job. Why is this "bad" again?


Now moving on to Risk Management. I started in Risk IT and moved into Market Risk at a top bank. Here are the facts:

1. Base is the same as IT, bonus is much more. Starting off your bonus will roughly double ITs, but this will increase in scale.
2. Hours are slightly more than IT. About 1-2 hours more a day; depends on your group
3. More enjoyable work. Pretty low pressure, and depending on your group it can actually be quite fun
4. The best job security in the world. Even if you leave where you are risk is in such high demand you will get placed in weeks.
5. Exits ops ARE low. You can move around from Market to Credit to Op risk. Moving out of risk is essentially a career reset.
6. MBAs will most certainly respect a risk position at a big bank!
 
Last edited:
Now moving on to Risk Management. I started in Risk IT and moved into Market Risk at a top bank. Here are the facts:

1. Base is the same as IT, bonus is much more. Starting off your bonus will roughly double ITs, but this will increase in scale.
2. Hours are slightly more than IT. About 1-2 hours more a day; depends on your group
3. More enjoyable work. Pretty low pressure, and depending on your group it can actually be quite fun
4. The best job security in the world. Even if you leave where you are risk is in such high demand you will get placed in weeks.
5. Exits ops ARE low. You can move around from Market to Credit to Op risk. Moving out of risk is essentially a career reset.
6. MBAs will most certainly respect a risk position at a big bank!

Agree mostly, especially with the overall point you're making (eg example vs investment banking). However, comparing market risk to risk IT is pretty misleading. Risk IT isn't paid as much as front office development, and it's not seen as the exciting place to be for developers.
 
Agree mostly, especially with the overall point you're making (eg example vs investment banking). However, comparing market risk to risk IT is pretty misleading. Risk IT isn't paid as much as front office development, and it's not seen as the exciting place to be for developers.
Yeah, agreed. I know nothing about front office developers though I would assume they make much more.
 
Last edited:
Back
Top