If you're looking to maximize your pay in a risk management job at a bank in New York City, there are two places to work: market risk, or model risk and risk analytics.
So says a new salary survey from finance recruitment firm Selby Jennings.
Based on compensation figures for 2019-2020 collected in March 2020, before the pandemic began, Selby Jennings' survey suggests that analysts and associates in model risk and risk analytics earn substantially more than their counterparts in other risk specialisms.
They continue to earn the most at vice president and executive director level too, although at managing director level pay across risk tends to equalize.
The disrepancy is mostly down to the higher bonus upside in market risk and risk analytics and model risk roles, which are more closely linked to the profits earned by salespeople and traders in the front office. However, model risk and risk analytics professionals also receive slightly higher salaries at junior levels, likely reflecting the fact that they're more likely to have postgraduate qualifications. By comparison, salaries for operational risk professionals are typically lowest.
Market risk professionals use calculations like value at risk to calculate traders' exposure to potential losses. Model risk and risk analytics professionals develop quantitative models to establish the prices of assets on banks' balance sheets and check that these models are operating in line with regulations. Credit risk professionals focus on the likelihood that borrowers might default. And operational risk professionals focus on the risk that something goes wrong in banks' operations - including, for example, 'conduct risk' or the bad behavior of some staff.
Anthony McCann, head of risk management at Selby Jennings, says pay this year should be on a par with last. "Compensation figures are still very consistent," he says. "Nobody knows what bonuses will look like at next year bonus payout but most expect it to be at least flat from last year, unless something crazy happens in the next few months."
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