Source: Risk Talent Associates
Risk professionals in the capital markets saw their average total compensation increase by just over 10% in 2005, according to the new Professional Compensation Survey – Capital Markets released today by Risk Talent Associates, a leading risk management executive search firm.
The survey was conducted across more than 500 risk professionals in the capital markets worldwide, with considerable focus on commercial, investment, and foreign-owned banks.
Higher cash and non-cash bonuses are driving risk professionals' compensation packages. Junior to mid-level positions, such as analyst and associate, through to vice president reported double digit gains in both categories. Senior officers, including managing directors and Chief Risk Officers (CROs) earned cash bonuses that exceeded 30% of their total compensation and total bonuses that made up roughly 70% of their total compensation. CRO's also saw their total compensation increase from just over $800,000 to $1 million USD between 2003 and 2005.
Michael Woodrow, President of Risk Talent Associates, stated, "It is no surprise that bonuses are up substantially in 2005. We all heard the news that capital markets firms had considerable earnings last year. As expected, they compensated their risk people accordingly, as sound risk management systems and practices allowed firms to take smarter risks that paid off."
Core risk technologists with solid quantitative finance and trading backgrounds were also in high demand in 2005. "These individuals were often rewarded with a high premium as firms put emphasis on investing heavily in technology to improve their risk infrastructure," said Woodrow.
Risk Talent Associates also noted that 17% of survey respondents reported changing their jobs in 2005 – and most who did stayed within investment and commercial banking. Woodrow added, "There is a developing trend that top risk managers, at all levels, who have seen increases in stature and compensation, are less likely to change firms. Last year, we saw several examples where firms refused to allow their top risk managers to go to their competitors. Hiring firms should understand that a candidate's current employer will likely try to match an offer. The market for an exceptional risk manager has become very tight, prompting total compensation packages to increase."