The survey yielded an average total compensation of $374,006 USD in 2004 for respondents who were primarily mid- to senior-level risk professionals. Sizeable bonuses made up almost half of total compensation: 30 percent of total compensation in cash bonus, and 25 percent in non-cash bonus (such as stock and options). Cash bonuses increased 15 percent between 2003 and 2004, with non-cash bonuses reported less frequently and only 4 percent over the previous year.
Michael Woodrow, President of Risk Talent Associates, stated, "With the volatility in the markets during the past few years, risk management has come mainstream. Investment and commercial banks operating in the capital markets have come to understand the value of seasoned risk management talent to help them manage their businesses. Compensation levels for risk professionals continues to increase and we do not see this trend slowing down in the near future."
Risk Talent found that in terms of tenure, an individualâs title accounted for a much higher variation in compensation than years of experience. Risk Talent also reported that the highest compensation packages were awarded at financial firms with the largest risk organizations, specifically commercial and investment banks in New York City and the US Northeast.
Hedge funds and funds of funds have had an impact on compensation in the capital markets, according to Woodrow. "As these firms mature and grow through institutional investment, so has the need to demonstrate leading-edge risk management capabilities. Because top risk talent sits in capital markets, hedge funds have been recruiting risk talent from there and this has had a significant impact on compensation levels," he said.
Risk Talent announced that it would complete three additional compensation surveys in 2005; one covering asset management (including hedge funds), a second addressing compensation of financial compliance professionals, and a final one dealing with compensation of risk professionals in the energy, consulting, software and corporate segments of the market.