Compensation and Market Trends Interim Report 2015 Risk ... risk management for less than 2 years against only 4% of men. In fact, broadly the same number of men and women responded

Compensation and Market Trends

Interim Report 2015Risk Management

Welcome to Barclay Simpson’s 2015 Risk Management Compensation and Market Trends Report Barclay Simpson has been producing corporate governance market reports since 1990. We use our Mid-Year report to update our Annual Report and as an opportunity to focus primarily on compensation. This report seeks to provide insight and guidance into compensation within risk management. This is supported by a comprehensive survey of risk management professionals registered with Barclay Simpson undertaken in June 2015. Clearly the respondents are not entirely representative as they are risk managers who are registered with a recruitment consultancy and have taken time to complete the survey. There are no doubt many risk managers who go through their career without doing either. Nonetheless, the results make for interesting reading and comparisons with previous years provide useful insights into changing shifts in risk management. Comparable reports exist for all other areas of corporate governance. They can be accessed in section 6 of this report (“About Barclay Simpson”) or at www.barclaysimpson.com. We place great value on the professional reaction to our reports and would appreciate your comments and any requests for further clarification or information.

BARCLAY SIMPSONCOMPENSATION AND MARKET TRENDS INTERIM REPORT

2015RISK MANAgEMENT

01/ ExECuTIvE SuMMARY /102/ MARKET ANALYSIS /203/ MARKET COMMENTARY /304/ SECTOR ANALYSIS /405/ SALARY guIDE & COMPENSATION SuRvEY /606/ ABOuT BARCLAY SIMPSON /26

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CONTENTS

Stable government positive for recruitment

Against expectations, post election, the UK not only has a government, but a stable one. This is a positive development for those looking to participate in the risk recruitment market. Another positive is a growing and increasingly profitable financial services sector. However, the cost of regulation is a major concern to the industry and one that has the potential to damage it’s international competitiveness.

Election a watershed moment?The election does in this respect potentially mark a watershed moment for corporate governance within the financial services industry. The banks, having engaged in reckless risk taking in the run up to the financial crisis and having been bailed out, were discovered to have subsequently engaged in market rigging and customer abuse, resulting in further scandal and fines. Given the level of fines and costly regulation to make them “safe”, banks have operated in an environment that has been anything but normal.

Individual responsibility to be extendedThe government’s response, the Fair and Effective Markets Review (possibly in recognition that “bank bashing” had gone too far) is a mix of rigorous rules and sanctions concerning the accountability of senior bank executives, together with a collaborative code of conduct that will be overseen by a panel of market practitioners. Banks now need to properly manage their businesses and keep

within the rules, aware that the chancellor has spoken of a new settlement to end the cycle of fines, regulation and taxes. A further proposal and one that will interest corporate governance practitioners, is that rules on individual responsibility should extend to the wider industry and include asset managers, brokers and hedge funds. Managers will potentially be fined or banned should failings result from the absence of proper controls. Clearly none of this is bad for corporate governance and will ensure that risk management budgets are properly resourced.

Salary pressures in checkWhilst chief risk officers are currently benefiting financially from their enhanced status, does this make for a more widespread boom in the salary and compensation paid to risk managers? Our survey suggests not. Although there are pockets where salary pressures are acute, they are by no means universal. Whilst the average salary increase achieved by risk managers staying with their employer has risen from 6% to 7%, the salary increases achieved by risk managers changing job has actually fallen from 20% to 19%. Many risk managers having worked in environments where costs have been aggressively managed and salaries kept in check, enter the recruitment market with realistic expectations. Bonuses have also fallen, possibly reflecting the curtailment of the bonus culture in the banking sector.

given this, a slightly surprising trend in risk management, and one shared amongst all areas of corporate governance, is that increasing numbers of risk managers believe they are adequately compensated. The percentage reporting they are satisfied has risen from 51% in 2013 to 57% in our latest survey.

ExECuTIvE SuMMARY01

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Whilst the average salary increase achieved by risk managers staying with their employer has risen from 6% to 7%, the salary increases achieved by risk managers changing job has actually fallen from 20% to 19%.

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MARKET ANALYSIS02

VACANCIES

vacancy generation stableAt the start of 2015 we reported that vacancy generation was consistently strong across risk management. A growing economy and rising levels of employment was feeding confidence. Six months on, after two years of strong vacancy growth, demand, albeit at a high level, has stabilised.

Most vacancies are generated not by an increase in the number of risk managers employed, but by the movement of risk managers between employers. During 2014 there was a period of catch up as more risk managers changed job. They had postponed looking for a new position when economies and confidence were badly hit by the Euro crisis in 2011. That period of catch up is now substantially complete.

given this, demand is currently evenly distributed across banking, insurance and asset management but with a notable up tick in-demand from retail banks. More junior credit risk managers are sought in corporate and investment banking and more senior operational risk managers in higher level, business facing positions. In-demand experience includes retail credit risk across both portfolio management and decision sciences, market risk analysts, 1st and 2nd line defence roles and risk managers with change experience particularly around banking regulation.

RATE of plACEMENTS

Companies are realisticTo provide a better insight into the dynamics of the risk recruitment market, this graph plots the rate at which placements have been made across the last four years. The graph demonstrates the rate at which candidates are being offered jobs which are then accepted.

In spite of the rate of placements significantly improving in the second half of 2014, at the start of 2015, 57% of risk departments reported that risk managers were hard to recruit. Currently both vacancy generation and the rate at which vacancies are being filled are stable. In our experience companies are currently serious about filling their vacancies and risk managers are serious about changing jobs. The interminable recruitment processes of two years ago are firmly in the past. If vacancies are currently going unfilled it is usually as a result of candidate shortages. This is particularly so in the perennially undersupplied retail credit risk market and change management where many risk managers prefer to work on a contract basis. Whilst few companies are looking to compromise on the standards they require, most are realistic. They recognise that highly marketable risk managers, and particularly more junior ones, can attract multiple offers and frequently receive counter offers from their existing employer. If they are going to recruit they may need to consider alternatives to their ideal candidate.

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- Placement rate

- New vacancies- Outstanding vacancies

MARKET COMMENTARY03

Market participants realisticThe new government appears to appreciate how vital the financial services industry is to the uK’s economy. The fair and Effective Markets Review hopefully sets the scene for a more collaborative approach to regulation. Critics of the uK economy question its lack of productivity growth. If that is the case, they possibly need to look no further than the financial services industry. The huge increase in the employment of risk managers and other corporate governance staff deemed necessary to make the industry safe, has on the face of it, done little to improve its productivity.

Regulatory initiatives None the less, going forward, there are still regulatory and governance initiatives that are or are going to impact the risk recruitment market. Whilst some banks have already adopted IFRS 9, many have not and will require additional headcount, particularly for Basel A-IRB model developers. The Fundamental Review of the Trading Book (FRTB) is another area where demand is anticipated, as banks seek to conduct and submit the results of their Quantitative Impact Studies (QIS) to the regulators. The PRA’s Supervisory Statement SS14/13 focus on the Advanced Measurement Approach is creating demand which far outstrips the supply of operational risk capital modelers.

New opportunities for risk managersThe development of financial crime and first line of defence roles is creating new positions for operational risk managers.

As financial crime functions grow, they have a strong interest in developing operational risk frameworks. This is resulting in operational risk managers migrating into financial crime/fraud. Further, the widespread deployment of the three lines of defence model in operational risk is creating positions particularly in the first line of defence. Significant numbers of risk managers are being deployed across business lines, operations, technology and corporate functions, including HR.

Risk managers generally realisticgiven the welcome stability of the risk recruitment market, there is a measure of realism amongst its participants. This is perhaps evidenced by the fall in the average salary increase achieved by risk managers changing job. Companies broadly recognise that in some areas of risk there are genuine shortages. In response they either have to take a more practical approach to the skills and experience they are seeking or they need to increase the salary they are prepared to offer. For candidates, changing job is not usually about salary but career development. Clearly for some chief risk officers and those with ‘in-demand’ technical skills and the desired interpersonal skills who are under no pressure to move, significant salary increases can be achieved.

Most risk managers understand it is a competitive market and have realistic expectations. As our survey confirms, a relatively high proportion (over 16%) of risk managers report they did not receive a salary increase in the last year and many moved for occasionally less, the same or frequently quite modest salary increases. The caricature of rampantly greedy investment bankers is not one demonstrated by the realities of the risk recruitment market.

Shortages of more junior candidates As a broad generalisation there are currently shortages of junior candidates who are able to achieve proportionately larger salary increases in the recruitment market. More senior positions generally attract higher numbers of more experienced and suitably qualified candidates. As a consequence companies are not always under pressure to offer significant salary increases. given the diverse nature of the market and the frequent need for risk managers to develop new skills and experience, there are always likely to be pockets of acute candidate shortage and oversupply. for risk managers looking to the future and their career development, they should as far as possible look to ensure their skills remain current and in short supply.

Women becoming better represented?An interesting finding, common to other areas of corporate governance is the current and future gender make up of risk management. Whilst the percentage of respondents to our survey who were women rose from 17% to 21% in 2015, when analysed, 13% of women responding to our survey had worked in risk management for less than 2 years against only 4% of men. In fact, broadly the same number of men and women responded that they had worked in risk management for less than two years.

Clearly, if that trend was extrapolated into the future, the current male bias in the profession may be in the process of a substantial shift towards greater female representation.

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SECTOR ANALYSIS04

fINANCIAl RISK

Within corporate and investment banking there are currently consistent levels of demand across both credit and market risk from analyst – vP level and less demand at director and MD levels. Candidate availability reflects this with a pool of senior candidates who can struggle to find suitable roles and a shortage of candidates with in-demand 2-6 years experience. Demand is substantially regulatory driven: either through a specific need to build out departments to ensure adequate business coverage or in response to specific regulatory requirements around risk measurement and disclosure. We anticipate that IFRS 9 and FRTB will continue to drive recruitment in both credit and market risk.

There is sustained demand within retail banking across the uK. These are usually highly technical roles and candidates are often in short supply. growth is being driven by some of the larger banks, as they focus on building on their success in retail banking, as well as established banks looking to divest significant portions of their business. There is further demand from newly or recently established challenger banks looking to compete with the established order or provide alternatives such as peer to peer lending. They are all competing for broadly similar pools of expertise: those with an understanding of credit risk analysis and portfolio management or an understanding of operational or capital/regulatory models.

Within insurance there is a steady demand from companies operating in the Lloyd’s market for risk managers with credit risk analysis experience. This is being driven by the banks, as they look to

the insurance market to distribute credit risk, and by Solvency II as companies look to diversify their portfolios to reduce their regulatory capital requirements. This is resulting in a modest migration of risk managers from the banking to the insurance sector as bankers take the opportunity to apply their skills in a different industry.

Within asset management there is steady demand for financial risk analysts to cover portfolios across different asset classes although predominately in fixed income and equities. Candidates usually possess a combination of skills, both quantitative and qualitative, and often specialise in a particular asset class. Although candidate availability is generally good, risk managers with multi-asset class experience are at a premium. Within some companies these roles are administrative and report focused, in others, risk managers work much more closely with portfolio managers.

BUSINESS RISK

The banking sector continues to dominate demand for operational risk managers and is being led by both uK and international banks seeking to fill vacancies in first and second line of defence roles. Demand in first line of defence roles include those for Conformance Officers, Business Risk Control, Operational Risk Managers and governance & Risk Managers. These all require traditional operational risk skill sets, including designing and implementing risk frameworks; establishing and reporting on key risk indicators; conducting risk control self assessments; improving processes and establishing controls.

The key requirements in second line roles are for risk managers with the

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“growth is being driven by some of the larger banks, as they focus on building on their success in retail banking, as well as established banks looking to divest significant portions of their business.

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technical ability to build, implement and/ or enhance risk frameworks coupled with the regulatory knowledge and the skills to communicate effectively with executive management and regulators. There is significant demand and an acute shortage of candidates from analyst through to senior manager level with Operational Risk Capital Modelling experience.

Outside of banking, demand for operational risk expertise from the insurance sector has picked up. The impact of Solvency II will ultimately have broad implications for the business risk recruitment market. The Regulator has stated that the implementation of the Directive in 2016 will be one of its main focuses. In a PRA statement in June Solvency II: regulatory reporting, internal model outputs the PRA set out expectations of how insurers should identify and manage all risks to which their business could be exposed over the long and short term. This will most likely only increase the already strong demand for operational risk managers. In fact the PRA is struggling to recruit the same risk managers the insurance sector needs to fulfil the requirements of Solvency II. Outside of Solvency II risk managers with strong operational risk framework experience are currently in demand.

The funds and wealth management sectors are providing a steady flow of business risk vacancies. There have already been a number of senior level moves in 2015 within asset management. However, more generally there is a heavy bias towards risk managers who are good generalists and are in the £70-90,000 range. In February 2015 the FCA released the paper TR15/1: Asset management companies and the risk of market abuse. Aimed at asset management companies and trade bodies representing asset management firms the paper presents the FCA findings from the thematic review

of how asset management firms control the risk of committing market abuse. The FCA expects those companies who did not effectively manage the risk of market abuse to make improvements to their practices. This will be a recruitment driver for risk and compliance functions in the asset management sector.

A more recent development and one that will no doubt grow is the increase in demand from industry and commerce for business risk managers. The telecoms sector has been particularly active.

THE CoNTRACT MARKET

Overall demand for contractors has remained strong. Operational risk contractors are currently in demand across the market and particularly so from the insurance sector. This is largely as a result of regulatory pressure to ensure key measures are set within Solvency II; focusing on ‘own risk and solvency assessment’ (ORSA).

There is relatively lower demand for credit and market risk contractors, particularly for BAu positions where opportunities have been limited. However, project and change management programmes have resulted in numerous roles for risk contractors to support the implementation of new processes, systems and model developments.

More generally risk departments are looking for contractors to help implement new regulatory requirements and fill gaps in permanent headcount. A more recent development has been the growth in demand for risk contractors within commerce and industry which reflects the increasing interest in permanent recruits, for example from the telecoms sector. Rates however are seemingly lower than in the financial services sector. As in

other areas of corporate governance, whereas companies were confident in securing the services of their preferred contractors on the basis of fixed term pro-rata salaries. Businesses are now having to revert to day rates which remain far more popular with contractors.

our survey suggests that contractors working in the risk management are positive. The vast majority had found their current contract within less than three months. Whilst 18% of respondents to our survey were not working, the majority have been looking for less than three months, and confidence levels are generally high. However, for some it is taking them longer to secure a new contract than in 2014. Only 6% of contractors working had accepted a reduction in their previous rate, 77% expressed satisfaction with their current rate and over 94% overall satisfaction with their contract.

Looking forward we anticipate that demand will remain strong in the risk management contract market through to the end of 2015 and most likely beyond.

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Operational risk contractors are currently in demand across the market and particularly so from the insurance sector.

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This Mid-Year Report includes a significantly expanded section on salaries and compensation, designed to give a much fuller picture of overall remuneration packages.

Most risk managers are keen to know their market worth. This is not always easy to address. Two otherwise similar risk managers may enter the recruitment market and accept materially different salaries. We provide this caveat because we are aware that the risk management recruitment market is sufficiently diverse that it defies simple categorisation. However, risk managers and their employers want guidance and this is what we attempt to provide.

As recruitment consultants we are involved in the negotiations that take place between employers and prospective employees. We are aware that whilst salary is usually the most important consideration, a number of other factors go to make up total remuneration. In addition to the data we gather from the placements we make and the recruitment work we do, including contact with risk and human resources departments about salary and other benefits, we have also conducted a Compensation Survey to provide specific detail on all different types of remuneration within risk management.

The Survey was of risk managers registered with Barclay Simpson and was conducted in June 2015. It generated several hundred responses.

Covers both permanent and contract marketsIn addition, we also conducted an Interim Compensation Survey focusing on the contract market. We have incorporated the key findings into this report to make it as easy as possible to understand the full picture for risk management.

We hope that you find the results interesting. This report provides the key highlights of the Survey. If you would like more detail about your specific sector or role, please call Matt Brown on 020 7936 2601 ([email protected]).

This section is broken down into 4 parts:

1. Key conclusions – Key conclusions from Risk Management Compensation Survey

2. overview – A Commentary on the major trends in salaries and other benefits paid to risk managers

3. Compensation survey – Results of Compensation Survey completed by risk managers

4. Salary guide – Guide to salaries for specific risk roles and positions

SALARY guIDE AND COMPENSATION SuRvEY 2015

05Risk Management

1 Key Conclusions

The results from the Barclay Simpson 2015 Risk Management Compensation Survey confirm an active and confident risk recruitment market where both risk managers and their employers are taking a realistic approach.

Women becoming better represented p 21% of risk managers are women against 17% women

in 2014

p Average time risk managers have worked in risk has risen from 9.8 years to 10.5 years in 2015

p 78% of risk managers surveyed have worked in risk management for over 5 years

Risk managers have been active p 28% of risk managers surveyed have changed job in the last

12 months, up from 25% in 2014

p 55% of risk managers primarily moved for career development reasons, 31% primarily moving to increase their salary

p 4% risk managers surveyed reported they were not working

Salary increase broadly in line with 2014 p Average salary increase of 19% achieved by risk managers

who changed job in the last year - 20% in 2014

p 7% average salary increase for risk managers who stayed with their existing employer - 6% in 2014

Value of other benefits mixed Bonuses

p 92% of companies paid bonuses in the last year

p Average bonus equivalent to 25% of basic salary down from 28% in 2014

pensions

p 92% of risk managers benefit from employer pension contributions

p Average employer pension contributions equivalent to 10% of basic salary up from 9% in 2014

long term incentive plans

p 25% of risk managers benefit from Long Term Incentive Plans

Other benefits

p 79% of risk managers recieve other benefits

p Average value of other benefits equivalent to £7,800 down from £7,900 in 2014

Risk managers becoming more content with their remuneration p Overall, 57% of risk managers content with current

remuneration, versus 53% in 2014

p Rises to 69% for risk mangers who have moved in the last year against 53% for those who have not moved

p Risk managers become more content as their salaries increase

p At 62% more risk managers are benefiting from flexible working

p Average holiday entitlement has risen to 27 days

High level of satisfaction amongst contractors who are working p 94% of contractors content with current contract

p 77% believe they are adequately compensated

p Clear difference in sentiment between those in work and those looking for work

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2 overview

Motivation for potentially entering the recruitment marketThis year we have gone on to ask what is the most likely reason risk managers would look for another job or attend an interview? unlike the results for some of our other corporate governance surveys, the results are consistent with those who have previously moved. The exception being that there were no respondents who cited job security. Whilst we hope it is a comment on the benign economic environment and the relative stability of the financial services industry, there will be some risks managers who perceive that their job security would be no greater working for another company.

If you were to look for another job or go for an interview, what would be the most likely reason?

Salary increases achieved by risk managers who stayed with their employerAccording to our survey, the average increase for risk managers who stayed with their existing employer increased from 6% to 7%. It is surprising that 16% of risk managers received no salary increase in the last year. Clearly, for a number of companies cost pressures remain. Given the low rates of inflation and even the brief flirtation with deflation, an average increase of 7% exceeds growth in salaries in the wider economy. However our average includes promotions and the buy backs that are not uncommon when valuable risk managers look to resign, an event not only often marked by the offer of a higher salary but also a bigger role.

Motivation for entering the recruitment market This analysis looks at what the primary motivation was for risk managers who have changed employer in the last 12 months. Although career development remains the key driver, salary has become more important. We suspect that as the economic recovery becomes more entrenched, risk managers, whilst still taking a realistic attitude, are more likely to consider realising their market worth. Clearly, job security, as we would expect in a stable and growing economy, is not a significant motivating factor. An interesting point is that men working in risk management are more likely to be motivated by a better work/life balance than women. Although not formally asked in our survey, amongst the comments section, a common refrain in both the risk and other corporate governance surveys was an interest in part time work. We have been aware for some years that many older, less salary conscious corporate governance practitioners, regularly give up permanent work and become contractors to enable them to work on their own terms. Employers should perhaps take note that there is potentially significant latent demand for part time work.What was your primary motivation for looking for another job?

Whilst salary is not the primary motive for most risk managers seeking another job, they will not unreasonably use it as an opportunity to better their salary. Our survey indicated that 69% of risk managers who had changed employer in the last 12 months were now content with their salary, against only 53% who had not changed employer.

What best describes your salary increase in the last year?

What is obvious from our survey is the reduction in the percentage of risk managers who received no salary increase at all. It has fallen from what was a startling 43% in 2013 to the current 16% which is broadly in line with other areas of corporate governance. This no doubt goes some way to explaining the steady increase in those risk managers who believe they are adequately compensated. It is perhaps also interesting that the approximately 40% of risk managers who received an increase in excess of 5% has remained consistent over the last three years.

Salary increases achieved by changing employerThe survey indicates that the average salary increase achieved by risk managers changing job is 19%, down but little changed from the 20% achieved last year. As we have already described, whilst risk recruitment is buoyant, it belies the impression that salary increases are only moving in one direction. Whilst marketable risk managers are in a strong bargaining position, most approach salary negotiation with prospective employers with a sense of realism.

There is a significant difference between the 19% increase in salary achieved by those changing job and the 7% average achieved by those who stayed with their existing employer. However, analysing the average, as we have done for the last two years, reveals a wide range of outcomes. It is particularly instructive that whilst 19% may be taken as the average, only 29% of risk managers actually accepted a salary increase between 10% and 20%. There are a wide range of considerations that go into the decision to accept a position, and whatever the resulting salary increase, the results of our survey indicates it is unlikely to be the average of 19%.

Which best describes how your current salary compares to your salary in your previous role?

The main difference between 2015 and 2014 is the increase in the number of risk managers who have been prepared to move for the same or even a lower salary. Again it belies what many might assume to be a rampant recruitment market where runaway salary increases are universal.

Whilst relocation or even redundancy represents an obvious reason to move and accept a lower salary, there are other reasons. Senior risk managers need to ensure their skills remain current and marketable and a job move / change of employer can make that possible and worthwhile, even at the short term cost of a lower salary. Equally there are those who are not seeking a bigger job but simply, in their terms, a better job. A new role might involve a shorter commute, improved work life balance or avoiding the responsibility and corporate politics that bigger jobs often require. The comments section of our survey allowed respondents to voice the pressure of responsibility some felt which was, in their opinion, not always in line with the salary they were paid.

What the analysis does reveal is the huge disparity that some companies are prepared to pay for risk managers with in-demand skill sets and particularly for those who combine them with commercial savvy and effective communication skills.

Satisfaction with salaryAlthough salary increases in 2015, both from staying put or changing employer are broadly consistent with previous years, risk managers are currently more likely to feel adequately compensated. The percentage of risk managers who claim to be satisfied has risen to 57%, from 53% in 2014 and 51% in 2013. It rises to 69% for those who have changed employer in the last 12 months against 53% for those who have not moved.

June 2011

June 2012

June2013

June2014

June 2015

17% 16% 19% 20% 19%

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Salary v Remuneration Base salaries always catch the headlines, however offers of employment invariably include other benefits. On average, these additional benefits make up over 30% of total remuneration. We will use this opportunity to provide an overview of the other benefits that risk managers might expect to receive.

BonusesWhilst salary increases rose from an average of 6% to 7% during the last year, the value of bonus payments fell. Bonus levels vary widely as can be seen from the general results section. Overall 92% of risk managers reported they worked for a company that paid a bonus, up from 90% in 2014. The average bonus paid in 2015 was reported to be 25%, which is down from 28% in 2014. Of those who received a bonus, 32% reported an increase with a further 19% reporting a lower bonus. Clearly the general direction of bonuses is modestly down which is common throughout corporate governance and confirms the element of realism that pervades the financial services industry. Bonuses, whilst potentially a good way of retaining and motivating staff, are almost invariably an inefficient way of attracting them.

Bonuses are often non contractual and may be paid on the basis of corporate or personal performance or a combination of the two. There can also be a qualifying period.

An issue with bonuses is that whilst a risk manager entering the recruitment market who has benefited from a bonus may add it to their base salary in terms of what they earn, they are more inclined to discount bonuses when discussing expected salary. This goes some way to explaining what can otherwise be relatively high increases in the base salaries achieved by risk managers moving between employers.

Bonuses vary considerably. Results from our survey reveal that 23% of risk managers received a bonus in excess of 30% of their base salary and 7% received over 60%. 78% of bonuses were paid in cash. 25% of risk managers reported that they potentially benefited from a long term incentive plan.

Bonuses in risk management make up a more significant portion of remuneration than in other areas of corporate governance surveyed by Barclay Simpson.

Pensions Workplace pensions have become mandatory and companies are in the process of introducing them. The results of our survey indicate that 92% of risk managers report their employer offers a pension benefit, up from 90% in 2014. As a result of workplace pension legislation, we assume the percentage will rise during the course of 2015 and approach 100% (as it should) in 2016. The average pension contribution made by employers rose from 9.3% in 2014 to 10.4% in 2015. Larger employers are generally more willing to pay higher contributions. The most common employer pension contribution received by 23% of risk managers is 10-12.5%, whilst 68% fell in the 5-15% range.

For new recruits, final salary pensions no longer exist in the private sector. Those who still benefit from these appreciate they are valuable and the cost of giving them up to join a new employer can be prohibitively expensive. Pension schemes in the private sector are invariably money purchase where the employer commits to making a contribution based on a percentage of salary.

Whilst there can be a short qualifying period before contributions commence, workplace pension legislation requires all companies to enrol an employee in a pension scheme within three months of employment commencing. For those who elect to stay enrolled, minimum employer and employee pension contributions based on an employee’s salary are now mandatory. Most companies pay above these minimums based on a fixed percentage of an employee’s base salary. The employee may or may not be required then to match it. Frequently employers will be prepared to match additional contributions made by the employee up to a fixed percentage. The percentage may increase both with the age of the employee, their length of service and management status.

Other benefitsCars or car allowances have become less common. They can still be expected where a role requires significant travel and also for senior hires. In terms of overall remuneration, a car allowance is frequently offered in lieu of a car and is often considered as non-pensionable salary when evaluating overall remuneration. A more common benefit for those working in London is a location allowance. This is a supplement for those working in London to cover the increased cost of either living in or commuting to London. The most valuable other benefit is Critical Illness Cover which is expensive to provide and is usually restricted to senior roles. However, Private Health Insurance is common and is often extended to all immediate family members.

Life Assurance, usually linked to a pension scheme, is normal, as is payment of at least one professional subscription. Other benefits may include season ticket loans, gym membership, subsidised dental care, personal and accident insurance and staff discounts. These are generally low value benefits.

79% of risk managers reported they received other benefits in 2015 with an average value of £7,800. This was down from £7,900 in 2014. Managers are more likely to receive higher value benefits and larger companies are more likely to pay them.

Flexible benefits This refers to schemes where employees are offered limited core benefits in addition to their base salary which is then supplemented by a benefits allowance. This benefits allowance can either be taken as salary or employees can choose to buy from a menu of additional benefits. These schemes became popular 10 years ago, particularly in the accounting profession, but have not been universally adopted.

Holiday entitlement The average number of days holiday survey-wide is 27 days, which is an increase on the 26 days reported in 2013 and 2014 and a similar result to those working in compliance. Risk managers are most likely to benefit from 25 days holiday (32% of those surveyed) with 53% reporting between 24 to 27 days holiday. Only 9% of risk managers have less than 24 days. Holiday entitlement, regardless of sector, is more likely to be enhanced by the number of years worked rather than seniority. As a strategy it represents a good way of rewarding loyalty and retaining staff but a poor way of attracting new employees.

An increasingly popular benefit is to provide employees with the opportunity to buy additional holidays. This is usually limited to an additional 5 days and would be purchased through salary sacrifice.

Flexible working flexible working is the opportunity to vary your hours of work or to work from home. It is becoming more popular. 62% of risk managers report they benefit from some form of flexible working up from 54% in 2014. Flexible working appears to be something that risk managers are more prepared to negotiate on when changing jobs. The results of our survey indicate that risk managers who have changed job in the last 12 months are more likely to benefit from flexible working than those who have not. Our survey also indicated that, unlike last year women are no more likely to work flexibly than men. Comments made by risk managers and other corporate governance practitioners make clear that flexible working is a highly valued benefit. It would appear that companies who are looking to recruit increasingly recognise this.

Employers are ultimately more concerned with output rather than simply attendance. Flexible working is an effective means of retaining staff and few employees once they have benefited from it would be prepared to give it up. We anticipate that this will ultimately become a more universal benefit.

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3 General Results

The composition of the sample ranged across all areas of risk management. Here are some of the key statistics:

Survey overview

p Proportion of women working in risk management is rising - 21% versus 17% in 2014

p Men have worked in risk for an average of 11 years v women 8.7 years

p 13% of women have worked in risk for less than two years against only 4% of men

p 57% of men have management responsibility against 38% of women

p Those with management responsibility on average have 12.5 years experience, those without 8.6 years

Q - How long have you worked in risk management?

General findings

p Average time in risk management 10.5 years v 9.8 years in 2014

p 51% of risk managers have worked in risk for over 10 years v 44% in 2014

High levels of experience

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Q - Are you currently working?

Slight rise in risk managers out of work

p Percentage of risk managers not working is low in absolute terms but has risen relative to 2014

p 63% of risk managers who are not working are finding it more difficult to find a new job than they anticipated

p 90% of risk managers who are not working have over 10 years’ experience

Q - Have you changed employer in the last 12 months?

Q - What was your primary motivation in looking for another job?

Q - If you were to look for another job or go for an interview what would be the most likely reason?

Recruitment activity

p Risk managers are more likely to have changed job in the last 12 months

p Risk managers working in private banking / hedge funds are most likely to have moved; those working in investment banks are least likely

p Regulatory and operational risk managers are the most likely to have changed job

p Career development still primary motivation, though decreasing in importance

p Salary as a motivation growing in importance

p Results almost identical to those who have moved job

p Career development remains the most important factor

Increased level of recruitment activity

Career development still primary motivation

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Q - Which band best describes your base salary?

Q - Which option best describes your salary increase in the last year?

Q - Which best describes how your current salary compares to your salary in your previous role?

Q - Overall do you believe you are adequately compensated?

Salaries

Average base salaries

Average salary increase 7%

Average salary increase for job movers 19%

Increase in satisfaction with remuneration

Sub-group Average SalaryInvestment Banking £107,700Corporate Banking £97,800Retail Banking £91,600Assest / Wealth Management £92,100Insurance £79,100Consultancy £75,900Men £98,500Women £86,500Overall average £96,800

p 2015 average: 7%

p Average salary increase up on 6% in 2014

p 14% with increases of over 15% likely to be internal promotions or buy-backs

p Average salary increase very similar to 20% in 2014

p 69% of people moving saw increases of over 15%

p 21% moving for less or the same will include a number moving for quality of life, defensive reasons or those looking to relocate

p Risk managers are generally more satisfied

p 69% of risk managers who have changed job in the last 12 months are satisfied, against 53% who have not

p Risk managers become more satisfied as their salaries increase - only 29% are satisfied that earn below £50,000, against 61% who earn over £100,000

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Q - Does your employer pay a bonus?

Q - Which of these as a percentage of your salary best describes your last bonus?

Q - What percentage of your bonus was paid in cash?

Bonuses

Bonuses almost universal

Level of bonuses down slightly

Over three quarters of bonuses paid in cash

p More employers paying a bonus - 2% increase on 2014

p Medium sized companies most likely to pay a bonus

p |No differemce between managers and non-managers

p Average bonus has declined in 2015, down from 28% to 25%

p Average bonus 32% for managers, 16% for non-managers

p Small companies more likey to pay a higher bonus

p Higher percentage of bonuses are being paid in cash

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Q - Does your employer provide you with any pension benefits?

Q - What is the approximate monetary value of any other benefits such as health, travel or car allowances?

Q - What contribution to your pension as a percentage of your salary does your employer make?

pensions

Other benefits

Nearly all employers contribute towards pensions

Other benefits more common, but value down

Average contribution up to 10%

p Percentage of companies making pension contributions has increased in 2015

p 79% of risk managers receive some form of other benefits, an increase on 2014

p Value of other benefits has fallen back in 2015 from £7,900 in 2014 to £7,800

p Managers more likely to receive higher value other benefits

p Larger companies on average pay higher other benefits

p Average pension contribution made by companies increased from 9.3% base salary in 2014 to 10.4% in 2015

p 68% of companies made a pension contribution of between 5-15%

p At 10.8%, managers benefit from higher contributions than non-managers at 9.9%

p Larger companies on average make higher contributions than smaller companies

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Q - Do you benefit from any form of long term incentive plan?

Increase in long term incentive plans

p Managers far more likely to benefit from long term incentive plans

p Higher paid and longer serving risk managers more likely to benefit from long term incentive plans

p Long term incentive plans more common in larger companies

Q - What is your holiday entitlement?

Q - Does your employer provide you with the opportunity to work flexibly to any significant level?

Quality of life

Average holiday entitlement up to 27 days

Increase in flexible working

p Average holiday entitlement has risen from 26 days in 2014 to 27 days

p The most common holiday entitlement is 25 days, enjoyed by 32% of risk managers

p 53% of risk managers benefit from between 24-27 days

p Only 9% of risk managers have less than 24 days, but only 7% more than 30 days

p Flexible working significantly up on 2014

p No real difference between men and women in 2015, although in 2014 women were more likely to work flexibly

p 66% of managers benefit from flexible working against 56% of non-managers

p 65% of risk managers who have changed job benefit from flexible working against the 60% who have not

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Contractors in work

GENERAl fINdINGS

Q - Do you think the market for your skills is improving or deteriorating?

Q - How quickly were you able to secure your current contract?

Q - How long have you been in your existing contract?

Significant increase in optimism

Contracts secured quickly

High percentage of contracts still over 6 months

p Significant increase in optimism versus 2014

p 94% think the market for their skills is improving or the same as in 2014

p Just 6% think the market is deteriorating

p 63% started within 1 month

p However, contracts are taking slightly longer to secure than in 2014

p 84% of contracts still over 6 months

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CoNTRACTS

Q - When considering a new contract, what is the most important consideration?

Q - Which best describes how your current rate compares with your previous rate?

Q - What is the anticipated length of your current contract?

RATES of pAY

Quality of work increasingly important

Rates of pay increasing

Contract lengths decreasing

p Type of work becoming key

p Rate of pay still important

p Nearly half report an increase, compared with just 37% in 2014

p Decrease in contracts anticipated to last over 9 months

p 6 - 8 months most common length of contract

Q - Are you satisfied with your current contract?

Q - Do you believe you are adequately compensated?

p Satisfaction with current contract not far off 100%

p Drop in satisfaction with compensation may reflect greater focus on quality of work than level of pay

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lEVElS of SATISfACTIoN

High levels of satisfaction

Contractors looking for work

GENERAl fINdINGS

Outlook more optimisticQ - Do you think the market for your skills is improving or deteriorating?

Market getting tougher for some

p Contracts taking longer to secure

p Contractors finding it slightly more difficult in 2014

Q - How long have you been seeking a contract?

Q - Are you finding securing a contract more or less difficult than anticipated?

p general increase in optimism

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4 Salary Guide

SAlARY GUIdANCE

Barclay Simpson analyses the salary data that accumulates from the placements we make in the uK. This provides a guide to salaries for risk professionals.

The salary ranges quoted are for good rather than exceptional individuals and take no account of other benefits in addition to salary, such as bonuses, profit sharing arrangements and pension benefits.

CoRpoRATE INVESTMENT BANKING - CREdIT RISK RANGE AVERAGE

graduate / Junior Analyst (0-12 mths) £25 – 40,000 £32,500

Analyst (2-3 years) £35 – 50,000 £42,500

Associate vice President (3-6 years) £45 – 70,000 £57,500

vice President (6-9 years) £70 – 110,000 £90,000

Executive Director / Senior vice President (10+ years) £100 – 130,000 £115,000

Head of Credit £100 – 150,000 £125,000

Chief Credit Officer £150 – 300,000 £225,000

Managing Director £150 – 250,000 £200,000

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CoRpoRATE INVESTMENT BANKING - opERATIoNAl RISK RANGE AVERAGE


Analyst (2-3 years) £35 – 50,000 £42,000



Director (9-12 years) £90 – 140,000 £120,000

Executive Director / Senior vice President (12+ years) £100 – 200,000 £150,000

Head of Operational Risk £110 – 300,000 £200,000


CoRpoRATE INVESTMENT BANKING - MARKET RISK RANGE AVERAGE


Analyst (2-3 years) £40 – 60,000 £50,000



Executive Director / Senior vice President (10+ years ) £100 – 200,000 £150,000

Head of Market Risk £100 – 200,000 £150,000


RETAIl BANKING - CREdIT RISK RANGE AVERAGE

Junior Analyst (0-12 mths) £22 – 28,000 £25,000

Analyst (2-3 years) £25 – 35,000 £30,000

Senior Analyst (3-6 years) £30 – 40,000 £35,000

Manager (6-9 years) £40 – 60,000 £50,000

Senior Manager (9-12 years) £50 – 75,000 £62,500

Director (12+ years) £75 – 90,000 £82,500

Head of Credit Risk £100 – 140,000 £120,000

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RETAIl BANKING - opERATIoNAl RISK RANGE AVERAGE

Analyst (0-3 years) £25 – 50,000 £37,500

Manager £45 – 70,000 £57,500

Senior Manager £65 – 100,000 £82,500

Director £85 – 130,000 £107,500


pRIVATE BANKING - opERATIoNAl RISK RANGE AVERAGE

Junior Analyst (0-12 mths) £20 – 40,000 £30,000

Analyst (2-3 years) £35 – 55,000 £45,000



Director (9-12 years) £80 – 120,000 £100,000


ASSET MANAGEMENT - opERATIoNAl RISK RANGE AVERAGE

Junior Associate (2-3 years) £35 – 55,000 £45,000



Director (9-12 years) £80 – 150,000 £105,000


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pRIVATE BANKING - CREdIT RISK RANGE AVERAGE


Analyst (2-3 years) £35 – 50,000 £42,500



Director (9-12 years) £75 – 100,000 £87,500

Head of Credit Risk £110 – 140,000 £125,000

ASSET MANAGEMENT - MARKET / INVESTMENT RISK RANGE AVERAGE

Associate £40 – 70,000 £55,000

vice President £70 – 150,000 £110,000

Director £90 – 175,000 £132,500

Head of Investment Risk £100 – 200,000 £150,000

Chief Risk Officer £200 – 250,000 £225,000

INSURANCE - RISK RANGE AVERAGE

Analyst £30 – 50,000 £40,000

Manager £40 – 75,000 £57,500

Senior Manager £70 – 110,000 £90,000

Director £100 – 150,000 £125,00


Chief Risk Officer £150 – 250,000 £200,000

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ABOuT BARCLAY SIMPSON06Barclay SimpsonBridewell Gate, 9 Bridewell PlaceLondon EC4V 6AWTel: 44 (0)20 7936 2601Email: [email protected]

If you would like to discuss any aspect of the reports please contact the following divisional heads:

Corporate governance Adrian Simpson [email protected] & IT Audit Daniel Flynn [email protected] Matt Brown [email protected] Tom Boulderstone [email protected] Mark Ampleford [email protected] Jane Fry [email protected]

To discuss our international services please contact:Europe Tim Sandwell [email protected] East Chris L’Amie [email protected] Pacific Russell Bunker [email protected] America Daniel Close [email protected]

Barclay Simpson is an international corporate governance recruitment consultancy specialising in internal audit, risk, compliance, security, business continuity, legal and treasury appointments. Established in 1989, Barclay Simpson works with clients in all sectors throughout the UK, Europe, Middle East, North America and Asia-Pacific from our offices in London, New York, dubai, Hong Kong and Singapore.

We add value by using our unique focus on corporate governance, our highly experienced specialist consultants and access to both the local and international pools of corporate governance talent. our strength lies in our ability to understand client and candidate needs and then to use this insight to ensure our candidates are introduced to positions they want and our clients to the candidates they wish to recruit.

for more in-depth coverage, comprehensive reports and compensation guides exist for the Internal Audit, Risk, Compliance, Security and legal recruitment markets. These can be accessed from the links below.

We also produce other specialist reports, each of which can be accessed for free on our website: www.barclaysimpson.com

www.barclaysimpson.com/mid2015markettrends/auditwww.barclaysimpson.com/mid2015markettrends/riskwww.barclaysimpson.com/mid2015markettrends/compliancewww.barclaysimpson.com/mid2015markettrends/securitywww.barclaysimpson.com/mid2015markettrends/legal

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Compensation and Market Trends Interim Report 2015 Risk ... risk management for less than 2 years against only 4% of men. In fact, broadly the same number of men and women responded