Review: A Life in a Day of a Buy-Side Risk Manager

Once again my colleague Dan Robertson has reviewed the event for us:

“A life in a day of a buy-side risk manager”

Anannit Sumawong is a Quantitative analyst at GAM, and he’s an alumni of the ICMA Centre where he studied a masters in Financial Risk Management. In his talk he shared what a typical day is like, and told us some of the things he wished he’d known when he was starting out in his career.

Anannit’s typical day starts around 8:30 and his key role is to calculate the risk numbers for various funds. These numbers are used throughout the business – by the fund managers to understand who their fund is performing, by the sales team to share with current and prospective clients and with compliance, who use them in the submissions they make to regulators.

In addition to g these tasks, Anannit also has a lot of project work implementing system enhancements. It is important that what he does is scalable and so whenever he builds new risk models, the next step is to work with the IT department to embed them in the business process.

During his day, he will typically receive over 100 emails and aims to finish at 6pm, although during busy periods this can be later.

So what are the key skills he wished he had known before starting his career in industry?

1. Economic intuition and understanding the effects of macroeconomic factors on the funds. This helps to put the risk numbers in context and explain why they might have changed

2. Statistical knowledge of risk models and the understanding of model risk

3. As mentioned above, what he produces needs to be scalable

4. Excel and the importance of fast (not necessarily scalable) numerical calculation for estimations and demonstration of ideas. Excel is still the best way to quickly test a concept and share it with a colleague

5. Processing large data sets using SQL, Python and other programming languages. He can be dealing with over 1m data points a day. Excel just doesn’t cut it for those kinds of problems.

6. Understanding financial instruments. You need to know what you are dealing with at the end of the day. Anannit quoted the example of job candidates with great maths and programming knowledge, but who didn’t know what a bond was. They didn’t get the job!

7. Quick evaluation of derivatives using Bloomberg, and getting used to their interface. Something all ICMA students get a chance to practice!

Interestingly for somebody with such a good grasp of numbers and detail, Anannit has also learned that some soft skills were vital.

Managing relationships and working in teams. Think about the stakeholders we’ve already mentioned such as sales, fund managers, compliance and IT. They are all very different functions with very different personalities.

Presentation. Anannit didn’t mean this just in the formal sense of making presentations, but in the broader sense of how you write you emails, format your reports or construct your spreadsheets. Very tellingly, he said that depending upon how something was presented, people made up their mind whether they were going to focus on the good things in there, or the bad things.

Finally, he recommends learning all the financial equations and how to calculate them with calculator! Whilst many formulas are given to students in degree exams, professional qualifications such as FRM or CFA don’t provide you with the equations - so memorise them now!

We thank Anannit for his interesting and entertaining insight into risk analysis.