The survey reports similar base salary levels for all risk professionals, regardless of years of experience, but much higher variability in salary and total compensation according to title. Most senior executives are taking home dramatically larger cash and non-cash bonuses. Managing directors and presidents at risk technology and software firms take home almost three times the bonuses awarded to vice presidents, and anywhere between four and seven times than those at a managerial level.
Michael Woodrow, President of Risk Talent Associates, stated, "The most senior executives reported non-cash bonuses that averaged around US $286,000 in 2005, up from $280,000 a year earlier. But the biggest leap came in the form of cash bonuses. In 2004, a managing director or president of a risk technology firm took home an average of $153,000. This year, the same individual could take home up to $204,000."
Woodrow continued, "Professionals at risk technology and software firms are not only experts themselves in risk management but they have to be great business people. Some of the most senior of these men and women were involved in managing recent mergers and acquisitions, beginning with MSCIâs purchase of Barra last year, as well as Fitch Groupâs acquisition of Algorithmics and a private equity firmâs purchase of SunGard in 2005. Risk technology and software professionals are valuable assets in todayâs dynamic and growing financial services marketplace. Our clients in the software industry are always looking for top talent to help them take the next leap in product development and to market these complex risk models and systems to the industry."
Roughly 100 professionals participated in the survey, with almost 25% reporting a change of jobs within the previous two years. Of those who did, 60% came from commercial and investment banking industries while the remaining came from other software and technology houses.
Risk Talent Associates also released a smaller compensation survey on corporate risk managers. This survey reports minor growth in total compensation and salaries in 2005, averaging 5.5% and 1.5% respectively. Average compensation rates are very similar for risk managers with 7 to 15 years of experience (US $255,000) and those with more than 16 years of experience ($265,000). Corporate risk managers with fewer than 7 years of experience receive on average $95,000 in total compensation. Cash bonuses made up roughly 40% of total compensation at the executive level, compared to 11% for risk analysts and risk managers. The survey also notes that 28% of respondents reported changing employers within the last two years, a figure that is consistent with most industry-segmented surveys released by Risk Talent Associates.
These reports are the second and third of four compensation surveys Risk Talent Associates is scheduled to release this month, which include studies of consulting, technology, corporate and energy risk managers. Risk Talent Associates has also released compensation surveys of risk professionals in the capital markets and asset management earlier this year.