Risk management compensation rises by 9%

Salaries for risk management professionals continued their upward rise in 2004, according to New York-based executive search firm, Risk Talent Associates.

The company's survey, which focuses on market, credit and operational risk, found average risk management compensation in the capital markets rose by 9% in 2004.

This meant mid- to senior-level professionals had an average total compensation of $374,006, consisting of a 30% cash bonus and a 25% non-cash bonus, such as stocks and options. Cash bonuses increased by 15% over 2003 while non-cash bonuses increased by 4% in the same period.

The survey’s results were supported by similar findings by Morgan McKinley, a London-based financial recruitment specialist, in November. Morgan McKinley specifically noted the strong growth in credit risk salaries.

The increased trading volume of structured products and regulatory drivers such as Basel II were said to exert strong upward pressure on risk management salaries.

Risk Talent Associates’ latest findings attribute some of this upward pressure to the increasingly important participation of hedge funds in the capital markets: “As hedge funds mature and require both leading-edge risk management tools and supervision, they recruit from the top risk talent pool in capital markets, thereby increasing overall compensation.”