Total Rewards Quarterly

The Emergence of the Control Function


It's been seven years since Lehman Brothers collapsed and set off a banking crisis that still stifles the global economy. Today, the banking industry is a lot stronger than it was, but some critics say efforts to reform banking regulations have fallen short of their potential. The 2008 banking crisis underscored how vulnerable the financial sector had become. The regulatory bodies and governments across the board were finally forced to take a hard look at the business operations across banks that were at the epicenter of the collapse.
Since then, the banking industry has witnessed three significant changes: they have started focusing on their core business, regulation has been rethought to make the banking system sounder and safer, and policymakers are looking to protect their countries' best interests and are putting up regulatory walls, thereby restricting the free flow of capital.

In the past five years India has grown into the global banking operations hub and is playing a key role in the transformation of banks and responding to the changes in the ecosystem. The increased scrutiny of banking operations makes it critical for higher focus on risk and compliance activities for most banks in India, as these centers are now responsible for servicing close to 65% of the global operations.

The Risk Landscape in India

The control function landscape in the country has undergone a significant change in the past five years. This evolution has been coupled with a change in the structure of the risk teams as well.


The risk teams are re-aligning themselves into a three tier structure. The different tiers could be classified as:

  • Tier 1 comprises activities which are repetitive and tend to take place on a monthly, quarterly or annual basis

  • Tier 2 comprises routine activities which would include defining criteria that determine if a risk has been managed or a control operated in line with internal procedures or external compliance regulations.

  • Tier 3 comprises collaborative activities that are aimed at bringing an organizational or group perspective to these testing and monitoring activities

The risk roles are also evolving and are slowly moving to the Tier 3 activities, where the risk functions are acting as an extension of the front office teams and supporting them in the entire risk management activities. Global In-house Centers (GICs) across the board are traversing this journey and are in different stages of evolution. The existing team sizes have gone up by 29% and are expected to further increase this year.
The rate at which the teams are expanding is very high and organizations are focusing on buying talent from the market, which has led to increasing challenges for the HR professionals.

The Talent & Rewards Implications for HR

The evolution of the risk functions has been accompanied with changing expectations and responsibilities. The  expectations from the team have evolved from being a simple operational process to providing real-time analytical support tostakeholders globally. They are now tasked with the responsibility of ensuring there is constant evaluation and identification of methods to reduce risk. This job enrichment has led to blurring of the lines between risk team in the front offices and the captive centers. This is clearly manifested in the decreasing gap in pay between the front offices and the captives. The junior professional roles have not undergone any change which is the reason why we witness the same disparity in compensation, but at the senior management levels we witness the gap reducing by approximately 30%.
This change in the work profile is also accompanied by a different talent sourcing strategy. Talent sourcing has evolved from hiring basic graduates for operational roles to hiring post-graduates and qualified professionals looking for analytical profiles. This is manifested in the employee demographics that we witness across the functions.

This job enrichment has led to blurring of the lines between risk team in the front offices and the captive centers

What is in it for the Future?

The evolution of talent in the risk function is likely to continue towards analytics and collaboration. The adoption  of technology and digitization of processes would lead to the basic functions being automated, thereby leading to a reduced workforce. The future talent pool will potentially be trained data scientists with mathematical and statistical knowledge who can convert large volumes of data into actionable insights. As organizations search for the best candidates for these positions, they will likely find themselves competing directly with technology firms. Building cooperative relationships with universities and financial-technology companies will probably help banks gain access to this talent. To win these candidates, the risk function will need to reshape its employee value proposition and tailor it to these new recruits. A holistic Total Rewards approach needs to be adopted to engage with the new and diverse talent.

Nishtha Sharma
Consultant, Aon Hewitt
Ankur Saxena
Consultant, Aon Hewitt

Get in touch
Aon India Consulting