Larger investment banks and financial institutions need risk professionals in a variety of capacities. That demand has made sizeable bonuses the order of the day.
The most dramatic demand is for risk managers who can bring "integrated skills sets to the table, from qualitative and quantitative financial skills," says Richard Meyers, chief executive of Richard Meyers and Associates, an executive search firm in Warren, N.J., that caters to the insurance and risk management fields. The ability to "look at the totality of risk from the insurance to financial perspective," is more important than whether a candidate is working at a financial institution or an investment bank, serving as chief risk officer or vice president of risk financing, or working in derivatives or rate swaps.
"Risk today is about insurance, technology, finance, treasury, and legal skills," notes Meyers. "The challenge is in identifying the talent, since many more company CEOs are mandating the acquisition of risk people to meet their business initiatives."
Demand Can Be Lucrative
A recent Risk Talent Associates compensation survey notes that bonuses continue to drive compensation growth for risk professionals in the capital markets. The survey found that salaries grew four percent between 2003 and 2006, and "growth rates in cash and non-cash bonuses (the value of stock, options and other non-cash compensation) were 11 percent and 8 percent respectively." Overall, average total compensation (including salary and cash and non-cash bonus) for risk professionals at commercial and investment banks, foreign-owned banks, government sponsored entities, and other firms operating in the capital markets increased from $340,000 in 2003 to $422,720 in 2006.
For analysts or associates, average total compensation in the U.S. grew from $111,000 in 2005 to $121,000 in 2006. For senior associates or managers, compensation rose $150,000 to $166,000. Vice presidents saw their compensation rise from $242,000 in 2005 to $264,000 in 2006. Senior vice presidents garnered $420,000 in 2005 versus $462,000 in 2006, while managing directors' compensation rose from $900,000 in 2005 to $984,000 in 2006. Finally, chief risk officers earned $928,000 in 2005, but broke $1 million in 2006, the survey said.
Risk managers from investment banks took home the top pay, RTA found, followed by their peers at foreign-owned banks and commercial banks within the capital markets. Enterprise risk professionals earned higher total compensation than those focusing on market risk. Their pay was followed by professionals in credit risk, risk technology, operational risk and financial compliance.