As the energy markets heat up, specialized risk professionals are in hot demand.
The boom in energy demand is creating a related need for energy risk professionals and traders around the world. Additionally, firms are expanding in the area, with many more investment banks and hedge funds moving into energy supply and trading. Over half of the firms surveyed recently by Risk Talent Associates, a New York-based executive search firm, expect their risk groups to increase in number. This bodes well for those in the field.
It's no surprise compensation for energy risk professionals grew 14 percent in 2006 over 2005. The RTA survey found salaries grew an average of 8 percent, and bonuses experienced double-digit growth across most job titles.
About 28 percent of the survey's respondents reported changing jobs within the last two years, while 24 percent expect to change jobs in the next two. "This may indicate it will be tougher to recruit energy risk professionals in the upcoming year, especially as demand for their skills widens through the banking community," says Michael Woodrow, RTA's founder and president.
A Shortage of Energy Traders
Despite all the good news, RTA spokesman Daniel Keppie notes there's been a tightening of the requirements for energy risk professionals, as well as energy traders. "And, with the strong focus on energy as of late, you'll be scrambling to find people," he says.
Allison Dorst, division manager for C. Bridges Associates, a New York City-based executive recruiter specializing in the capital markets and banking, says energy traders specifically are in short supply. "In energy, when you're at a firm, the breakdown is by sector on the commodities side - whether you're a natural gas trader, crude, etc.," she observes. "On the bank side, it's by product. If you're at a hedge fund, you will do the entire commodity, since the firm is small."
Today, Dorst says the biggest challenge is to find enough people with the specialized skills to do energy trading. "There really aren't enough people to go around, and it's hard to figure out why, since it's a great end of the business to be in," she says. For now, Dorst believes most experienced energy traders are staying in place while waiting to see what this year's bonuses will look like. "This is such a cyclical business," she says. "Go back a year, or maybe a year and a half ago, and it wasn't like this for energy traders."
A Bumper 2006
RTA's survey reports associate/analysts in energy risk earned total compensation of about $127,000 in 2006, compared to $116,000 in 2005. Senior associates/managers earned $166,000, up from 2005's $144,000. Vice presidents pocketed $286,000 in 2006, up from $266,000 in 2005. Directors earned $309,000 versus $257,000, and managing directors or chief risk officers made $478,000 in 2006, compared to$403,000 in 2005.