Risk Managers Pack Punch Despite Modestly-Sized Staffs

Firms get plenty of bang for their buck when it comes to their risk management departments, which remain modestly-staffed on average regardless of the size of the firm.

Indeed, the “2004 Risk Management Compensation Survey” by Logic Associates, co-sponsored by National Underwriter, found that the “professional staff” (including the risk manager, but excluding clerical workers) at the smallest firms profiled–those with $200 million or less in sales volume–averaged two people and did not grow dramatically no matter how big the company.

Those firms with sales volume between $1 billion and $2 billion averaged a little over four risk management workers–only twice the average staff of the smallest category despite sales five-to-10-times higher. Even at the biggest-size category–those with over $15 billion in sales–the average risk management staff only totaled about six people.

None of the companies surveyed were truly “small”–only relatively so (and all were large enough to have a full-time risk manager). Still, the smallest sales category averaged between 1,500 and 2,500 employees, while the largest had between 80,000 and 100,000 workers. Still, the size of the professional risk management staff did not differ by a wide margin no matter how large the firm employing them.

“There’s no doubt that for the job they do, the amount of money they handle and the size of the exposures they have to control, risk managers on average have very small staffs,” said Bill Perry, president of Logic Associates, the profession’s leading risk management placement service, based in New York.

“Of course, you must keep in mind that these are averages we are dealing with,” he was quick to add. “There are companies out there with massive staffs of 20 or more, but on average risk management departments are not overstaffed by any stretch of the imagination.”

Part of the problem is making senior management aware of what risk managers do and how critical their work is to the bottom line, according to Mr. Perry.

“You still keep hoping that as the job has evolved into tackling much tougher challenges, companies are more appreciative of what risk managers do and what they mean to their organizations,” he said. “It’s a constant education process.”

One other personnel development cited by Mr. Perry is the slow but sure growth in the number of female risk managers.

However, while women make up nearly half of the risk management workforce at smaller-sized firms, as the companies get bigger, the percentage plummets–bottoming out at only 10 percent for firms with more than $15 billion in sales.

“It’s hard for anyone–man or woman–to break into the biggest firms, because there isn’t as much turnover at those lofty levels,” noted Mr. Perry. “That’s the pinnacle of the profession, and people aren’t so quick to leave those jobs. But as risk managers at bigger firms retire, there are plenty of qualified women who have cut their teeth at smaller operations ready to step in and take their place.”

Indeed, he added, “there’s quite a farm system being built in the smaller companies.”

In addition, he noted that women are taking a higher profile in the profession, with female presidents of the Risk and Insurance Management Society both this year and next. RIMS’ current president (Nancy Chambers, risk manager of the Waterloo Region Municipalities Insurance Pool in Ontario, Canada) will turn over the reins this week to her successor (Ellen Vinck, vice president of risk management and benefits for United States Marine Repair in San Diego).

“These types of role models will help propel women to better positions in the industry overall,” said Mr. Perry. “It’s just a matter of time.”