27 October 2016
Elton Cane

Elton Cane

Elton Cane - writer & tech geek

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Innovation in Financial Services

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

Linking investment bank remuneration to risk assumption.

12 December 2008  |  4443 views  |  1

Earlier this week The Guardian had an interesting piece on the bonus culture at investment banks. The Financial Services Authority has written to the chief executives of major firms to urge them to review pay policies to ensure they take account of the risks being run by traders. And UBS is already moving in this direction by devising a system that withholds part of a bonus - through a self-styled "bonus-malus" system - for up to four years.

Sensing which way the wind is blowing, data analytics vendor SAS has teamed up with human capital specialist Coalition, which does a lot of HR and salary benchmarking at top investment banks. They will be launching their joint offering and providing more detail at the Finexpo Risk and Transaction Management event in early February. But the idea - linking the risk analytics associated with trading desks and individual traders with peer-benchmarked salary and bonus information - is likely to be popular with the regulators.

TagsRisk & regulationWholesale banking

Comments: (1)

Tony Kehoe
Tony Kehoe - ODL Securities Ltd - London | 29 December, 2008, 19:15

I think this will be a natural reaction by the Regulators and Corporate Governance bodies of Financial Institutions to implement some form of "bonus-malus" schemes for Trading Desks.

However, before the Regulators and Institutions (encouraged by a flurry of Risk Management Vendors) implement another set of $$$ "bonus-malus" risk management software and controls, I trust those said Institutions get to grip with their existing risk management controls and systems to ensure the risk management basics are in place to aid prevention of getting into the mess they have got themselves into already!



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