While risk management compensation continues to rise, risk managers are certainly earning their extra pay by working longer hours and expanding their traditional role to deal with new types of exposures, the profession's top placement expert contends.

“The reality remains that even at the biggest companies–maybe especially at the biggest firms–the risk management department is fairly modest in size,” noted Bill Perry, president of Logic Associates in New York.

Indeed, Logic's latest “Risk Management Compensation Survey,” co-sponsored exclusively for the fourth straight year by National Underwriter, found that at the smallest firms queried–those with less than $200 million in sales volume–the risk management department averages only two professional staff members and 1.25 clerical workers.

However, as the size of the company grows by billions, the risk management department remains relatively small. At firms with over $15 billion in sales, the department has an average of only six professional staff members, along with four clerical workers.

“No matter where risk managers are working, they are working harder,” according to Mr. Perry. “Even where firms have increased their staff and upgraded risk management information systems, in general, risk managers are a hard working, even overworked group. It's common for me to get back to clients between 6- and 8 o'clock in the evening and still find them in their offices.”

Given our productivity-driven culture, and with most companies trying to get by with less staff to squeeze more out of the bottom line, this trend is not necessarily particular to risk management, Mr. Perry conceded, “but the fact remains that risk managers are working extremely hard.”

Part of the reason, according to Mr. Perry, is that “the risk manager's role continues to expand as they get involved in broader financial exposures beyond the standard property, liability and workers' comp areas. They're doing more. What they're adding on is more complicated, and it all takes much more time to handle.”

How can a risk manager convince their superior–either the chief financial officer or the treasurer, in most cases–to add more people to an overloaded risk management staff?

“You need to document your productivity to your immediate boss–the kind of hours you are working and the increased workflow your department is handling,” Mr. Perry advised. “Certainly adding a significant responsibility can help make your case–launching a captive that needs hands-on management, or having to baby-sit a newly created self-insurance fund for workers' comp, for instance.”

He added that risk managers “also need to demonstrate sound time management skills–that they are able to delegate and keep everyone productive.” Otherwise, the CFO might think the risk manager's problem is a management issue, rather than a shortage of staff, he warned.

Proving that additional bodies will translate to lower expenses and bigger profits overall for the company can also help, he noted. “Document how adding a safety specialist can boost loss control, cut claims and improve productivity, or how hiring a claims manager can maximize savings when launching a captive or self-insurance fund,” he suggested.

Quantifying how the risk management department saves the company money while bolstering the bottom line also strengthens a risk manager's personal negotiating position on salary and bonus, according to Mr. Perry.

“A risk manager by definition needs to be a pretty good negotiator to deal effectively with brokers, insurers, claims adjusters, lawyers and vendors,” he noted. “Those same skills come in handy when negotiating pay and related benefits, so risk managers should always look to develop their negotiating skills, both to advance their department and their career.”

Special Reports /

Risk Managers Work Longer Hours, While Taking On More Responsibilities

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