Cost-cutting by banks and doubts about the integrity of some of their analysts have got to have an upside.
Ethan Berman, chief executive of RiskMetrics, has found it. A New York-based quantitative analysis firm that was spun off from JPMorgan in 1998 by 25 people, RiskMetrics now employs just over 200 and provides more than 450 clients with risk analysis tools.
"I'd be lying if I said I saw how everything would develop," says Berman. "Like I say, better lucky than smart. But I do think we did things well."
Berman's career switch in his mid-thirties followed 11 years in investment banking. He and his colleagues - risk managers and computer programmers - could not see much future at JP Morgan. "They looked at the senior people there and saw that they were not risk managers and programmers," he says.
On top of that, their work, focusing on data management, daily risk reporting and cross-product volatility analysis, was not a core part of JP Morgan's business.
Meanwhile, the Long-Term Capital Management disaster hit the markets, making risk analysis a function no bank could afford to be without, and forcing JPMorgan to cut costs.