Hefty Increases To Risk Executives

Pay for risk professionals has risen dramatically over the last five years as companies have become more pro-active, and less reactive, in their approach to risk. Some of the largest increases have gone to risk executives in asset management and capital markets.

Risk Talent Associates' 2006 Professional Compensation Survey says chief risk officers for investment banks, commercial banks or other firms operating in the capital markets earned about $1 million in total compensation last year, while managing directors earned about $917,000. Risk professionals on the asset management side made similar amounts.

Richard Meyers, chief executive of Richard Meyers and Associates, a New Jersey-based executive search firm specializing in insurance and risk management, says the business challenges presented by the terrorist attacks of September 11 and the enactment of Sarbanes-Oxley have put a premium on talented risk executives, and that marked pay increases appear to track with the need for skilled personnel in the field.

''These variables - 9/11 and the regulatory environment - have certainly contributed to the popularity of risk management,'' Meyers says. ''Now, top management, from the CFO to the CEO, has an emotional connection to the cost of risk. The approach is now proactive, and not just reactive as it once was.''

Since 2001, pay has risen about 30 percent for risk executives overall, Meyers says. A top risk professional - such as the chief risk officer at a firm with revenues of about $3 billion to $5 billion - might earn anywhere from about $245,000 to $300,000 in base salary. The next in line, such as the vice president of risk management, could earn anywhere from $175,000 to $250,000 in salary alone, says Meyers.