Risk and Control executives are encountering ongoing talent and recruitment difficulties throughout the financial industry. The increasing digitisation and automation, as well as the need for adherence to complex and far-reaching regulatory responses and reporting, have created a talent gap that is difficult to fill.

This talent shortage is viewed as a significant obstacle to the future success of these organisations. Effective risk management is reliant on high-performing personnel, yet many banking leaders are struggling to recruit and retain the skilled professionals they require. During 2022, there was an uptick in hiring budgets, but there was also an increase in staff turnover. Following the pandemic, companies resumed business operations, with many adopting hybrid working arrangements, and there was an increase in recruitment, particularly in sectors such as: direct lending, fintech, and crypto.

Additionally, according to a recent global bank risk management survey by EY/IIF, 94% of Risk and Control leaders stated that they need to hire new resources and skills to meet the changing needs of their functions. In direct alignment, The Omerta Group's book of work at the senior c-suite end of the market directly matches these trends with the most sought-after candidates possessing a data-driven, analytical, and technological skill set that combines quantitative and qualitative abilities and the ability to delve into the minutiae while communicating complexity with clarity.

[Figure from EY/IIF's Global Bank Risk Management Survey (2022); Percentages indicate the proportion of respondents that nominated each category as one of the "most important skillsets required in the risk management function over the next three years"]

Additionally, many leaders' express frustration that a substantial portion of their weekly schedule is dedicated to hiring. However, hiring trends, and the fact that everyone is seeking the same skills at the same time will likely only exacerbate this issue. For 2023, we anticipate that successful Risk and Control leaders will need to form closer partnerships with their CHRO (Chief Human Resources Officer) departments to improve staff retention in critical areas and address skill gaps.

We recommend that firms consider both attacking and defensive strategies to address talent risk:

On the one hand, organisations should use Defensive Strategies:

A. Brand - Organisations should leverage their brand to attract and retain top talent by creating a positive and engaging work culture that aligns with both the organisation's and the employees' values and mission.

B. Succession planning - Firms should prioritise succession planning by proactively identifying and developing internal employees who have the potential to take on leadership roles in the future. Investing in these employees through training and development programs can help them feel valued and engaged, while also providing a clear path for advancement within the organisation.

C. Retention techniques - such as competitive compensation packages, flexible work arrangements, and employee recognition programs should also be implemented. These techniques can help to ensure that employees feel valued and motivated to stay with the organisation. When individuals bring their concerns to leadership, it is important to listen and address them in a smart and effective manner.

In summary, retention strategies require a multifaceted approach: By harnessing the company's brand, aggressively pursuing succession planning, promoting training and development, and implementing effective retention techniques, organisations can attract and retain top talent, create a positive work culture, and achieve long-term success.

On the other hand, organisations should also consider Attacking Strategies:

A. Firms can utilise executive search, recruitment, and management consultancies. They can provide access to best practices and individuals who have worked with competitors, giving companies a competitive edge, improving their performance and talent shortages.

B. To be most effective companies may need to broaden their search and look beyond the financial services industry for potential candidates. This could involve hiring from sectors such as big tech, software, consulting, and engineering, which often train employees in programming, analytics, and advanced technology. Doing so can bring fresh perspectives and skill sets that are not commonly found within finance.

C. Another option is to seek out mature skill sets from related industries. For example, sectors such as aerospace, defence and telecommunications have individuals with advanced cybersecurity skills. Companies can also consider hiring from sell-side investment banking, which typically has large and mature risk departments that can be useful for firms with less developed risk departments in sectors like insurance or asset management.

Another approach is to invest in graduate and entry-level positions to train individuals with the necessary skill sets, which can provide a long-term solution to talent shortages and create a pipeline of talent for the future.