Bring on the risk managers on the 1m salaries

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In the bold new risk management landscape, some senior risk managers are allegedly being paid abnormally well. A former head of risk at one large hedge fund- turned prop trader at a bank, says there are senior risk managers out there who are earning 1m. Most of them are apparently working in hedge funds.

As a former risk manager himself, he personally thinks heads of risk should be paid in the region of 1m base as a matter of course: "At the end of the day, it was penny-pinching on risk management that led us into this debacle. There are senior managers who still don't get that."

Lloyd Blankfein may sympathise. Last week Lloyd said risk managers must be elevated so that they're on a par with traders. He neglected to say whether this applied to risk managers' pay, however.

There are distinct signs that some hedge fund risk managers are doing well for themselves.

Wassim Rehman, head of risk controls at Marshall Wace, is retiring aged 28. And Bloomberg recently ran an article feting the risk systems at Brevan Howard and the role played by its chief risk officer Aron Landy. Landy apparently has the power to dump traders who don't listen to his suggestions and has even told Alan Howard to cut positions.

However, Adrian Marples, a consultant at risk recruitment firm GRS, says it's a case of severely wishful thinking to assume that some risk managers are earning 1m, even at the few remaining successful hedge funds.

"Influence has increased, responsibility has increased, but at the end of the day, risk managers are not revenue generators and are not paid to be," he says.

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