In Conversation with CQF Alumni: Naomi Yarrow

Naomi Yarrow, Head of Capital Risk Oversight, NatWest Group

Naomi earned the CQF in 2006. She started her career in Product Control Valuations before working her way up to Head of Capital Risk Oversight at NatWest Group. We spoke to Naomi about advancing in quant finance and the most rewarding things about working in the field.

Why did you decided to pursue a career in quant finance and how did you get to where you are today? 

I have a PhD in chemistry, and I've always had great interest in science, math, logic, problem solving, and engaging in debate. When I finished my PhD, I felt that the academic route was not for me and began exploring my options, including finance. At the time, the world of independent price verification and challenger models was under development in the derivative space. There was a huge growth in quant jobs and yet it was also quite new and unfamiliar territory for many people, so it was an exciting environment. There was a lot of academic discussion, and I was able to learn a great deal during that period because we were all learning together. I started on an independent pricing modelling team and moved into a trading role, where I traded derivatives. This included innovative structured products, things like property-linked notes in both residential and commercial real estate. These are no longer actively traded, but I still think are good products and just need to be managed properly. 

You are an alumna of the Certificate in Quantitative Finance (CQF). How did the program fit into your progression?

During this phase in my career, I developed confidence in speaking with my peers in the bank, and investors. Completing the CQF program enhanced my knowledge and ability to communicate because we covered the fundamentals of quant finance, with deep dives into the main models and their strengths and weaknesses. The math behind these models requires certain assumptions that don't always work, and you need to be well-aware of that. In addition to offering clear critiques, there is value in the ability to condense very difficult technical information down to three or four key points that senior management need to know.  Throughout my career I've seen that this type of insight and skill distinguishes those that transition into senior management roles successfully. 

What would you advise for people looking to advance in quant-focused roles?

You develop those skills mainly by putting yourself out there and trying different roles that interest you. In my case, I moved from modeling to trading, where I worked for five or six years. It was very interesting, but then the financial crisis happened, and I decided to step back from the front office and return to pricing model methodology and validation. Having a solid understanding of the basics allows you to challenge colleagues on assumptions and pricing. When you offer well-considered comments, you are not just making noise, you can become a trusted voice and provide a perspective, where we are all working in a risky environment and must be clear about that. Having an informed opinion, studying diligently, and being able to express your views, whether they are in concurrence or dissent with others is important.

What are some of the most challenging aspects of finance?

One of the challenges we are facing these days is that after years of model development and technological innovation, people are now using models with less understanding. Getting people interested in the quantitative methods or the assumption behind those models can be a real struggle, whereas when I first started, nobody trusted the models and they were working through the methodology much more carefully. It comes back to continuing professional development and education too. Last year I ran a change program within the Group, sponsored by the Group Ex-Co, which was an excellent experience. I would encourage anyone to try and get airtime with senior stakeholders in that way because it will enhance your skills in winnowing down the details and presenting the kind of condensed information they need. You can position yourself to make the right impact with steady practice and exposure over time.

What do you find most rewarding about your role these days?

For me it was very much about the bigger picture, as it is in the sciences and chemistry in particular, the cause and effect. I've only been in my current role for a few months and there are many challenges and questions on capital risk, for example. We know rising interest rates impact the balance sheet and you want to be well-prepared for that. It also means talking to a lot of people and obtaining a range of viewpoints. Personally, I'm quite happy to go up to someone and ask questions, which has opened many doors for me. So, back to the career advice, I would strongly recommend being inquisitive and taking calculated risks. A bank never stays still, so it’s good to stay on your toes.

How did the CQF add value in your career trajectory?

I did the CQF a long time ago and it has had a significant impact throughout my career. Most recently, I have attended several CQF Institute offerings, including the portfolio management conference and a conference on machine learning and data science. It's nice to have a view outside of your organization because you can easily get bogged down in a rather insular view. Reaching out through conferences and networking with the quant community is invaluable. Also, just do a lot of reading in the field. I get the Financial Times and read it for the actual commentary. It's really enlightening to see what the financial community finds troublesome and how they resolve things. In terms of quant foundations, I came from chemistry, so I hadn't done statistics. My math skills were good, but we had not covered all the areas that are relevant in quant finance. The CQF does a great job in getting people up to speed in those areas. Remember, there are no stupid questions, you just have to learn and upskill yourself as you go. It’s a very interesting journey from science of any kind to finance.

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