Demand Pumps Pay in Risk Management

As 2007 begins, risk management professionals in the New York City area are benefiting from high demand. Their compensation packages are also enjoying a boost. Same old, same old.

According to projections included in Manpower's Employment Outlook Survey, the financial industry's first quarter hiring outlook is slowing in much of the country, but not in key sectors in the Northeastern U.S. In that area, financial employers are expected to add staff, and professionals in the Big Apple in particular should benefit from the increase.

Michael Woodrow, president of the risk-management search firm Risk Talent Associates, sees finance firms in New York as being in hiring mode. "From Goldman Sachs to the Federal Reserve, there are new job opportunities out there for the right people, especially risk-management professionals," he says.

Risk management professionals are especially needed in the capital markets, in asset management at traditional firms and at hedge funds. "They're also needed in consulting and at energy and software firms, as these are the vendors for the capital markets and for asset management," adds Woodrow. And, as traditional asset managers learn to operate like hedge fund managers, they'll be looking to recruit more sophisticated risk professionals, as well.

Demand Pushes Pay

With such demand comes an increase in compensation for those at the top of the game. "We're seeing compensation up some 25 percent from year to year in top sell-side firms for those in key positions," Woodrow says. This pressure has made it more challenging for smaller firms to recruit people away. In an effort to keep people onboard, a nunber of firms are matching offers coming from the outside. Top market and credit risk people are getting packages of $500,000 or "much, much more," in Woodrow's words.

Those on the market-risk side aren't seeing their compensation grow quite as quickly as their colleagues in credit risk. "There's a big need to beef up systems on the credit-risk side, and that's playing a role," Woodrow explains. "The market-risk side is a bit more mature. There are also new products coming into play on the sell side in the energy market. That's when the expertise of compliance or risk people is key."

On Wall Street, risk professionals can continue to look to hedge funds for additional opportunities, at least in the short term. "People with front office risk experience are the hottest folks right now, especially at hedge funds," says Woodrow. "If you can manage money and risk, then you're a valuable commodity. There are a lot of firms, even outside of New York City, that want that sort of talent. It could be Asia or Iowa, and with the demand for risk professionals growing worldwide, it helps to drive up compensation packages here."