Q4.2 2024

An emerging market trend we increasingly see is Risk talent looking to downsize. One of the key factors driving these individuals from the doors of bulge-brackets and into the foyers of less globally significant banking institutions, or private funds, comes down to team feel. While there is no doubt that leading global franchises are undeniably attractive to graduates and analysts, long stints in large teams can lead to a strangulation by red tape, a pummelling by process, a bruising uppercut of underappreciation.

This consistent migration of talent from large banks to mid-cap institutions is worth exploring, as is the question: is it possible to replicate small team feel in the largest of banking institutions?

Dynamism

Deals are manoeuvred through the bureaucratic channels of large institutions somewhat tediously, with sails reefed, and as approval processes drag on, hours become longer. Similarly, large-cap banks face more stringent regulatory requirements than mid-cap players due to their systemic importance. Risk analysts, particularly in Credit, spend a greater portion of their time ensuring compliance with these regulations, which can further increase the duration required to close deals.

In smaller teams, risk and front office collaborate closely and have fewer internal processes and red tape to overcome. With more direct access to decision-makers, deals can move forward at a significantly faster rate, thus incentivising talent and rapidly increasing the speed of their development. Equally, though still significant, there is less regulatory burden to contend with at mid-cap level, which helps to move business along sharply.

Agency

There is the danger that an overly defined/designated structure can pacify Risk talent, squeezing them into one-dimensional roles. In smaller teams, where organisation and processes are looser, Risk talent gets well-rounded exposure to all areas of business and a wider variety of stakeholders. The result is a more capable risk analyst, well-placed to make decisions up and down the vertical.

Ultimately, Risk analysts seek to retain their agency through making decisions – by making an impact on risk appetite. Weighing up risk and reward is a skill that wants and needs to be exercised. It follows, then, that falling in line with rigidly uniform and almost consecrated leverage limits on transactions at larger shops pales in comparison to the prospect of opportunistically pushing forward and drawing back om risk appetite on deals where beneficial, which is more common within smaller teams.

Camaraderie and Flexibility

Now to the real crux of small team feel: smaller teams allow for closer interactions and stronger relationships among team members across the hierarchy. When individuals are united by a common cause, e.g. building out a team, individual contributions become more visible, and Risk analysts can see the direct impact of their work on the team, and ultimately the bank’s success. This visibility can create a sense of ownership and foster a collaborative team spirit, which in turn creates an outcome-driven environment rather than a process-driven environment. This often coincides with a more flexible working environment, where hybrid set-ups and work-life balance are prioritised.

Replicating ‘Small Team Feel’ in Large Banks

There are always opportunities to better recognise contributions across a large team by awards/incentives while inducing wider camaraderie through social outings, but as efforts to replicate small team feel go, these are largely the tired ideas of those marching on the beaten track. The more radical but effective method of replicating the coveted small team feel centres around further subdivision of risk teams – be it down product lines, regional lines, or coverage niches. As well as making for more developed and specialised functions, this sub-division goes hand-in-hand with decentralised decision-making and increased autonomy for Risk talent, as they are tasked with building out and redefining risk processes.

A majorly significant benefit of sub-division is that it fosters a start-up feel but with the safety net of a huge balance sheet to fall back on. The team focuses on growth, the spirit of which unites Business/Origination and Trading/Risk, but as they sit within a well-funded division in an already profitable franchise, team members are free of the omnipresent anxiety of going under that start-up entrepreneurs know all too well. Closer contact time between senior and junior colleagues develops organically, increasing the rate of junior development and enhancing senior leadership qualities.

As it happens, a small, growing team within a large institution is a major pull for recruiting market-leading talent externally, as the pitch is in essence a retelling of Goldilocks: it represents the perfect balance of agency/autonomy in a global franchise that will serve to bolster their CV – a very attractive prospect.

Eversearch provides executive search and modern talent solutions exclusively to the risk and finance sectors.

We are true sector specialists and partner with a select group of core financial services clients that demand best-in-class talent. Many of our clients have partnered with us over several years. We are an extension of their in-house talent strategy and are trusted advisors. We know their operations well and have great instincts on how to navigate challenging talent pools to deliver consistent results.

Risk has emerged as one of the most important business functions across complex financial services institutions. While many of our competitors now cover the sector, our differentiators are our depth of experience, thorough insights and proven ability to deliver on otherwise hard-to-find talent.