New York / June 8, 2009 – Risk professionals in the capital markets saw their average bonus decrease by 20%, and average total compensation decrease by 12% in 2008 over 2007, reflecting the impact of the credit crisis, and early parts of the recession and financial crisis. These figures were reported in the fifth annual Professional Compensation Survey by Risk Talent Associates, a leading risk management executive search firm. Last year’s survey demonstrated a healthy 8% compound annual growth rate between 2003 and 2007. This year’s data depresses that number to a 1% CAGR between 2003 and 2008, essentially reducing gains in total compensation back to 2003-2004 levels.
The 2009 survey reports that average salaries decreased by only 1%, in stark contrast to deeper reductions in cash and non-cash bonuses as firms operating in the capital markets could not pay their employees bonuses typical of the industry historically. For 2008, 21% of respondents reported not receiving any bonus, compared to only 7% in 2007. Michael Woodrow, President of Risk Talent Associates, notes, “the fact that salaries did not get hit as hard signals that companies place an ongoing value on top-quality risk management. The declines in bonuses reflect the broader trend of pay overhaul in the U.S. banking system.”
Risk professionals hardest hit by compensation reductions are those with the most years of experience and senior titles. Bonuses dropped by 21% and 19% respectively for the most senior professionals- those with over 16 years of experience, and those with 7-15 years of experience. Bonus decline for those with 6 or less years of experience was only 7%. Total compensation for Chief Risk Officers, which has routinely topped $1 million in previous surveys fell to $764,000. Michael Woodrow adds, “for Chief Risk Officers and senior risk people with executive status, compensation is more directly related to firm performance. These individuals shared in the company losses incurred through the financial crisis.”
Over 300 risk professionals representing the capital markets participated in this year’s Risk Talent Associates salary survey, including participants from commercial banks (42%), investment banks (36%), foreign-owned banks (8%), government sponsored entities (6%), credit card (3%), mortgage brokers and lenders (3%) and foreign exchange (2%). Risk Talent Associates, an executive search firm focused on risk management, will publish additional survey updates in 2009 including asset management, compliance and other risk fields (software, consulting, energy and corporate). All surveys analyze compensation trends by years of experience and title, industry segment, risk focus, and geography.
About Risk Talent Associates
Risk Talent Associates (www.risktalent.com) is the leading international executive search firm focused exclusively on positions in the fields of market, credit and operational risk, as well as financial compliance and risk technology. Risk Talent’s expertise, industry knowledge, proprietary network and dedicated focus shorten the recruiting process to deliver senior and mid-level risk managers in the capital markets, asset management, energy, consulting and software industries. Risk Talent has offices in New York, Chicago, London, and Hong Kong.
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