Steve holds a mathematics degree from Imperial College London and an advanced studies certificate in mathematics from Cambridge University. He worked in the insurance industry with an actuarial consultancy in Britain before joining Ernst & Young there and subsequently moving to Australia.
What does your work involve?
Two things: risk and finance. There are several types of risk: banking risk (capital assessment); market risk (stocks, bonds, derivatives); credit risk (lending), and operational risk. With market risk, for instance, a bank that is trading in a particular product needs to know the risks it is taking and we calculate the quantum of that risk and the amount of capital it should hold to cover it. With credit risk we need to work out where there could be a default on a loan, so this is a prudential kind of calculation. Operational risk has more to do with modeling the bank’s processes or systems to see where losses might be occurring. The second part of my work, quantitative finance, also involves risk management but is focused more on the valuation of derivatives (options, swaps, futures). It also needs mathematical and actuarial ability.
What made you change to a banking focus and were there any problems?
In life insurance, where I began, there are some risks that have similarities to the risks in derivatives and it made me interested in that kind of analysis. After a few years with Ernst & Young, my focus just moved more and more to the banking and derivatives elements of the field because they present different problems to solve and require different approaches. The hardest thing in changing fields was leaving the comfort zone of what was familiar and going to an area where I didn’t know the clients or what they needed. There was an adjustment period.
What qualifications and skills do you need?
The academic requirements are quite specific. You need to have a maths and actuarial degree rather than accountancy qualifications although you also need to be completely familiar with prudential and regulatory requirements and legislation. Analytical ability is crucial, but so are communication skills. You have to be able to communicate complicated mathematical concepts in a way that people can comprehend them. This is a difficult thing to do and is the one skill most often lacking in people wanting to enter the field.
Steve’s tips:
- Get the best mathematical qualifications you can
- Learn to communicate mathematical concepts in non-numerical ways so clients understand what you’re saying.
- Be inquisitive. The people who get jobs are the ones who just want to solve problems.
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