New York / April 30, 2008 – Risk professionals in the capital markets saw their average total compensation increase by 7% in 2007 over 2006, with an 8% compound average growth rate (CAGR) since 2003. Increased bonuses continue to be the main driver, with 11% growth in cash bonus and 6% growth in non-cash bonus for 2007 over 2006. The highest growth rates in total compensation are for new risk managers (professionals with less than 6 years of experience) and less senior titles (Analyst, Associate, Senior Associate and Manager). These figures were reported in the fourth annual Professional Compensation Survey by Risk Talent Associates, a leading risk management executive search firm.
Despite the tumultuous credit markets, risk managers continue to be valued and rewarded. Sixteen percent of risk managers report changing jobs in the last two years, while 33% expect to change jobs in the next two years. These numbers have not changed significantly over the last few years and suggest ongoing stability in the market for risk management talent. Michael Woodrow, President of Risk Talent Associates, explains, “It does not appear that risk managers took the fall for issues in the markets and related losses at large companies. Firms recognize that a strong risk management team will sound the warning. Many of the firms hit hard by the sub-prime fallout could have averted major issues had the most senior business managers followed the advice of the risk managers.”
Woodrow went on to state, “Hiring in risk management slowed in the first quarter of 2008 as firms attempted to fill open positions with redeployed workers from other areas. However, we have already seen hiring pick up in the present quarter and expect it to remain strong for the rest of the year.” Firms in the capital markets continue to seek top risk talent as a competitive advantage- 93% fill positions through internal recruiting, 62% leverage retained search firms, 56% utilize job boards and 50% use contingency recruiting firms.
Over 600 risk professionals from the capital markets worldwide participated in the survey, with two-thirds representing the commercial and investment banking sectors. The survey notes that compensation for managers specializing in market risk or credit risk is almost equal, and only slightly less than compensation for those focused on enterprise risk. This represents a change from previous surveys where market risk compensation topped that for credit risk. In terms of geography, compensation for risk professionals in New York, Asia and Europe outpaces other regions. During the remainder of 2008, Risk Talent Associates will publish compensation surveys on asset management (including hedge funds), financial compliance, energy, consulting, software and corporate risk.
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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