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By DAN REYNOLDS, senior editor of Risk & Insurance®

Risk professionals may feel themselves invaluable to a company's stop-loss program, but there are times, and these are those times, when expectations need to be adjusted.

The survey was conducted by the London-based GRS Group, an executive search firm that works in the risk, insurance, legal and tax arenas. The survey targeted individuals working in risk who make a salary that is in the $75,000 to $80,000 range and above.

David Butters, a consultant with GRS, was on the road this week, but he shared some insights with Risk & Insurance® during a cell-phone interview about why risk professionals in his country are so glum about their bonus prospects.

"You can see that people are much more realistic about what their expectations are, compared to last year," Butters said.

The struggling economy is one obvious reason. Insurers, banks and other sectors are seeing reduced revenues, losses in many cases and subsequent reduced bonus pools. But what surprised Butters and his associates was the degree to which risk professionals had adjusted their expectations.

Even in the leanest of times, Butter said, a risk manager for, say, a bank might feel justified in expecting a bonus. After all, when losses threaten everyone, who is most equipped to limit those losses? Why, the risk manager of course. Therefore, if anyone's going to get a bonus, the risk manager might feel justified in expecting one.

In the fall of 2008, despite darkening economic clouds, the profession of risk management seemed to be on the upswing, Butter said, aided by the finance media.

"Risk departments were in the media a lot. The expectations of risk professionals in the fall of 2008 were that, 'I will be okay. If there is any bonus pool it will still be attributed to us,' " said Butter.

Well, that expectation has changed significantly.

According to the GRS numbers, in the fall of 2008, 67 percent of risk professionals still expected to get a bonus. By the spring of 2009, in the midst of the U.K.'s bonus season, which Butters said runs roughly from January through April, 56 percent of risk professionals expected a bonus, a drop of 11 percentage points.

Back in November of 2008, there was such confidence among some in risk management that 12 percent of respondents said they expected their bonuses to double in 2009.

By the spring, the cheekiness had turned to something more closely resembling humility. Just 3 percent of the survey respondents felt their bonuses were going to double, a drop of 9 percentage points.

Six months ago, 43 percent of those surveyed said they expected their bonus in 2009 to be the same or larger than in 2008. That now reads more like 31 percent.

When Risk & Insurance® took a look at the compensation of brokerage CEOs last month, we found that "incentives" ran pretty much in line with salary. Aon's Greg Case, for example, had a 2008 salary of $1.5 million and "incentives" of $1.4 million.

Butters seemed to think that kind of bonus structure wasn't out of the question this year for some.

"Those figures are available to the right individuals," he said.

May 21, 2009

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