“What should I be looking for in my first Risk hire? Where do I even start?”
“What should our org structure look like for Risk?”
“Isn’t this just the same as Compliance?”
“How do I find Risk people that can operate in an early-stage environment?”
At SentiLink, we have a strong conviction that underlying every great Fintech product, there is a strong Risk team.
Here’s another way to think about it - if you sign up for a Fintech product, be it a card or an installment loan or a payment account, and you’re impressed by a smooth and low friction signup flow or the ability to transact quickly with a new card or credit line in hand, you should really be thinking “Wow, what a great Risk team."
Our goal in this post is to share some of our own experience in building Risk teams, and from partnering with the current generation of Fintech innovators.
Risk, the Fintech R&D Tradecraft
As is often the case of several jobs in the startup world, there’s no list out there that calls out the set of skills or responsibilities that a good Risk analyst or manager will cover. Unless the founders and early team at a Fintech company already have experience in the space, they may not know “what good looks like."
At the early stages of a new Fintech venture, it’s imperative that Risk is viewed as an R&D function, and usually that means that the early Risk foundation will need to cover aspects of:
The area that many Fintech startups most overlook is the business value of starting a skilled and experienced Risk Operations Analyst team.
One or two strong analysts can provide a tremendous amount of “R&D” value to a Risk organization, as their deep and nuanced understanding of fraud investigative or underwriting techniques will:
Another trait that we find in good early-stage analysts is the ability to automate their own work with some basic analytical and technical skills. The ability to write and run basic scripts and write SQL queries (to find and display the data they need to do fraud investigations, surface trends, create dashboards, and backtest a decision rule’s impact) will have a tremendous impact on an early-stage environment and reduce the load on other teams.
No matter how you set up a Risk org, we believe this combination of human analyst deep investigation, data science decisioning systems, and product management intuition, are the core activities that enable smart Risk decision-making at scale.
Setting up a Risk Org
Another common question that startups have around Risk, is how to properly set up a Risk team. We’ve seen a few options out there, and we’d preface that in a high-growth startup, organizational structures and design can change every 6 to 18 months - what works at one stage of a business may not work later on as product or revenue business lines start to become more well-defined. And sometimes organizational patterns at startups just simply aligns with who the strongest executive leaders and management are within an organization.
Here’s some options we’ve seen in early stage companies:
1) Create an independent Risk function that includes both analytics and operations. This is our most common recommendation, if we are pressed on our preferred org structure.
2) Group Risk with a related functional group such as Compliance, Analytics, Operations, or Engineering.
3) Don’t create a Risk organization at all:
Common Scaling challenges
No matter what organizational structure you pick, we’ve seen a few common friction points and challenges in high-growth Fintech Risk orgs.
Finding scalable Risk team members for the early-stage environment
Finding Risk talent that is comfortable with the ambiguity and pace of an early-stage startup environment can sometimes be a challenge, especially if your sourcing pool tends to draw from more mature risk teams (such as banks). We’ve found that the best early risk analysts and leaders at Fintech startups tend to have these qualities:
If you found this post interesting and want to take a deeper dive into the topic of building teams and organization at high growth startups in general, some of our favorite content includes:
SentiLink is publishing a series of articles and webinars on the craftwork of Risk in high growth startups: best practices, organizational design and hiring, benchmarks, and insights we’ve seen from the most successful Risk teams in Fintech.
This content is designed to be a helpful guide for early stage FinTech entrepreneurs and operators as they scale their startups to their first 100 employees. We would love to hear if there are specific topics you’d like us to cover.
Vivek Ahuja’s background in Risk at high-growth Fintech companies includes risk product management at Marqeta, credit and fraud risk management as Affirm’s head of Merchant Risk, and as the co-founder leading anti-fraud efforts at Xendit.