According to this year’s RIMS Risk Management Compensation Survey, risk management professionals saw significant salary increases from 2019 to 2021. On average, U.S.-based risk professionals at all levels and responsibilities reported a 14.4% jump in their base salary in 2021, while Canadian practitioners saw their salaries go up by 18.8% as compared to 2019. In 2021, the median base salary for risk professionals was $135,000 in the United States and $120,000 in Canada.
The increase was a sizable reversal from the compensation trends in 2019, when the RIMS survey noted an average 1.7% base salary decrease from 2017 in the United States and a 4% decrease in Canada.
A number of factors have combined to create this shift, including the COVID-19 pandemic, climate change and Russia’s war on Ukraine. The increasingly complex and uncertain business environment has forced companies to assess and develop new risk management strategies to respond to unexpected risk exposures and market changes. “The demand for experienced risk managers to perform those assessments surpasses the availability by far, which increases risk management salaries,” said Bodo Friese, corporate group risk manager for Schlumberger.
The pandemic, in particular, significantly raised awareness of the importance of risk management and this has started to be reflected in salary levels. According to Jody Queen-Hubert, director of Greenberg School of Risk Management’s Ellen Thrower Center for Apprenticeship and Career Services at St. John’s University, salaries for newly minted risk professionals have gone up noticeably—in one year, the average reported student salary increased by $10,000 as companies face a more competitive labor market. “The war for talent is real, and hiring and retaining candidates is a top priority,” she said. “Companies have bumped up their salaries to adjust to a new reality.”
With risk management in high demand for the foreseeable future, what can risk professionals do now to showcase their value and ensure they can earn better salaries?
Demonstrating the Value of Risk Management
Unfortunately, a new risk landscape alone does not automatically translate to better career opportunities or salaries for risk professionals. “Sadly, most companies look at risk management in terms of ‘How much premium did you save me this year?’” said Millie Workman, director of training and education for the International Risk Management Institute (IRMI) and advisory council member at insurance and risk management fraternity Gamma Iota Sigma. It often comes down to the cost of the program rather than how well risk management worked with other areas to reduce claims or help make process improvements.
To overcome this, it is critical to highlight the successes achieved through internal partnerships and connections. Building relationships within a company demonstrates a value that management can see beyond insurance and costs, Workman said.
For example, Kristen Peed, director of corporate risk management for CBIZ and member of the RIMS board of directors, gained additional visibility while serving on her company’s COVID crisis team. “I was able to showcase a lot of my soft skills,” she said. “You have to be good at communication, performing under pressure, decision making, project management, research and all of those things that we do as risk managers.”
For Peed and many other risk professionals, COVID presented critical logistics challenges as companies struggled to continue operating without putting employees and customers at risk. “Risk managers have their hands across the company,” Peed said. “We touch everything: finance, operations, health and safety. We touch all the business units, so we were the great connector of all those different people during the crisis.”
Such relationships offer tremendous value when unexpected events strike. Jennifer Santiago, head of risk management and safety for Wakefern Food Corporation and vice president of the RIMS board of directors, said that the pandemic gave risk professionals like herself the opportunity to walk different business units and divisions through risk management exercises like scenario planning. She also conducted risk assessments across the organization, which demonstrated the level of understanding that risk management has of enterprise-wide operations.
This broader perspective allows risk professionals to identify new threats and pivot quickly. For example, Peed noted the wide range of risk issues that have emerged amid different phases of the pandemic thus far. Keeping operations moving required installing protective partitions and handling the logistics of remote work, then contract tracing became key. As her company operates in different states, new and evolving local requirements presented other challenges, such as scheduling employees in the office to ensure buildings were not at capacity and workers could be physically distanced. The risk team even had to address travel schedules and potential illness among staff.
Understanding regional differences, including employee commutes, was also part of Peed’s risk management strategy for keeping employees safe. “If I lived in New York City and had to get on mass transit, I probably would have felt very different about going to the office than I do in Ohio, where I get in my car and drive to my very secluded office and nobody is around me,” she said.
It is important for risk professionals to cultivate that kind of forward-thinking approach. This requires knowledge of what risks are top-of-mind for organizations and strategies for how to mitigate those risks. “Understanding what the company does is the first and most important thing a risk manager needs to know,” Workman said. Where risk professionals can truly distinguish themselves, however, is extending those skills a few steps down the road for their organization. “Understand enough about what the company does so that you can ask the appropriate questions and look forward,” she advised.
The more a risk professional can demonstrate the ability to be a value driver in the organization, the more crucial their skills become to management. “To throw out there that you have reduced premiums by 20% sets an expectation that maybe you can do that every year,” Workman said. “Then, when there are increases by 20%, you’re in trouble.” Instead, she suggested finding a different metric, such as cost-per-exposure, that can provide a more accurate picture of risk management.
Understanding the Risk Landscape
In addition to demonstrating risk management’s value and strengthening soft skills, risk professionals should be thinking about today’s more prevalent risks and building expertise in these areas. “It’s all about continuous learning as a risk manager,” Workman said. “I still spend an hour a day reading. You have to stay ahead of the game. That way, you find things that can impact a company’s risk.”
For example, cyberrisk knowledge has become an important skill set that hiring managers are looking for. On top of the immediate risks, cyberthreats also drive up insurance prices and prompt coverage restrictions, which will ultimately spark greater interest in alternative risk financing and captives. Staying informed and looking for these types of interconnections among risk issues can help ensure a seat at the table and demonstrate your relevance as a business contributor.
Business continuity and supply chain expertise are also in demand, driven by pandemic-related delays and losses, as is the ever-increasing focus on ESG (environmental, social and governance). Indeed, Santiago believes understanding of ESG frameworks will become another must-have skill set, especially if regulators continue to mandate ESG reporting as the SEC recently proposed and if rating agencies decide to start rating companies on their ESG profiles.
As risks expand, the tools risk professionals rely on should expand as well. For example, assessment tools like the RIMS Risk Maturity Model can help an organization understand its competitive stance and the year-over-year progress of its risk management program. These tools can help risk professionals further highlight the important role they play in helping the organization exploit risks and drive growth. “Being able to come forward with ‘Look at what this has created, look at what the technology has accelerated for us’ will keep us at the table,” Santiago said.
The Education Edge
The visibility of risk management is improving as more students attain degrees in risk management and insurance and participate in on-the-job training or internship programs. “The profession has really been elevated in that respect,” Santiago said.
To increase their effectiveness as professionals, risk management students should work on more than their coursework. “They need to be working on their soft skills, as well as the core skills that all employers are looking for, like technical and leadership skills,” Queen-Hubert said. “Communication skills are practically number one, so this includes any campus activities that involve teamwork.”
Even experienced risk professionals should be looking for continuing education opportunities. Today, a wide range of options are available to risk professionals to boost their knowledge and improve their skills. This can include attending conferences, professional development workshops and in-company training sessions, or earning certifications like the RIMS Certified
Risk Management Professional (RIMS-CRMP) or the Project Management Institute’s PMI Risk Management Professional (PMI-RMP). These resources can help distinguish risk managers from their peers, open them to a wider range of career opportunities and, in turn, lead to higher compensation.
Santiago believes now is an opportune time for risk professionals to discuss compensation and career advancement. “I think there will be a little leveling off because we have short-term memory,” she said. “A lot of organizations will get a few years out and people will forget about how bad the crisis was.”
Risk professionals that can demonstrate the value of risk management to the organization and highlight their expertise in the field will be able to improve their earning power. “The risk management skill set—that strategic view, the ability to do strategic risk assessment, scenario planning, both value creation and value preservation, risk modeling—all of those skills are going to become more and more vital,” Santiago said. “This is a time for risk professionals to really show their value and come out from behind the desk. You can’t grow in your career if you’re not growing as a professional.”