Want a Bigger Bonus? Work in Risk Management

Vintners and supercar merchants may need to change their target markets. It’s the risk-controllers, not the risk takers, who are taking home the bacon this year.

(February 21, 2013) — Risk management professionals and insurance company employees are on course for the most improved bonuses this year, while other financial workers could see benefits flat-line, research has shown.

A survey of international financial businesses, by consulting firm Mercer, showed one-third of insurers expected to increase the bonus pool available to staff, whereas two-thirds of banks would reduce them in 2013.

Those in risk-taking roles are the most likely to receive smaller bonuses in 2013, with European firms the most pessimistic on awards that will be made to staff.

Salary increases are on the cards for executives across most financial firms, but those in risk management and control functions can expect to see the highest increases – up to 2.5%, Mercer said.

The consulting firm said this was a direct response to regulatory pressure as banks and other financial firms use pay as a means of improving risk management by attracting and engaging talented, experienced staff.

Executives working in the insurance sector can expect pay increases of up to 3%, Mercer said, while the regional split of companies had a large influence on benefits.

Financial services workers in emerging markets can expect the highest salary increases – between 4% and 5% – followed by those employed in North America. European financial sector workers are in line for the lowest benefit increases of all.

Mercer found most companies were not predicting many further major changes to their benefit plans after many had radically overhauled systems following the financial crisis. A shift towards long-term incentive programmes has been initiated and this is expected to continue with a higher percentage of bonuses awarded in shares.

Overall governance of compensation, particularly for senior executives and material risk-takers has also improved, both internally as well as at board level, Mercer found. Total compensation levels are up from where they were three years ago, but have not yet reached pre-crisis highs.