Airmic salary and status survey: many boards fall short of latest risk guidance

Airmic has revealed the results of its salary and status survey. Among the key findings, over half UK boards don’t sign off their company’s risk management programmes, the role of the risk professional is expanding, and average salaries continue to rise. Jessica Titherington reports.

Despite senior executives now being required to take a more proactive role in their company’s risk management, an Airmic member survey has revealed that only 44% of boards authorise their enterprise risk management programmes. A significant number still rely on audit committees or do not get sign off at all.

The percentage of boards which authorise their company’s spend on insurance premiums is higher, at 55%. However, 12% of companies reported that they do not get a formal sign-off of their insurance programme at all.

“Recent guidance from the Financial Reporting Council (FRC) makes clear that boards must now have ultimate responsibility for risk management.” Paul Hopkin, Airmic technical director commented. In particular, the guidance says boards must be responsible for ‘ensuring the design and implementation of appropriate risk management and internal control systems’.

“The FRC has avoided being too prescriptive in its guidance, but our survey suggests that more boards will need to authorise their risk management programmes in the future,” Hopkin added.

Airmic’s salary and status survey, conducted of its members every two years, provides a snapshot of insurance buying trends, a profile of today’s risk professionals and a gauge of the shifting status of risk management within the corporate structure.

This year’s survey also highlighted that insurance buyers appear not to be buying more insurance despite lower prices. Airmic members spend an estimated £5 billion in insurance premiums, with another £2 billion going into captives and a further £2 billion in uninsured, self-insured or retained losses.

“These figures are roughly the same as the last time we gathered this data five years ago, showing that our members still maintain their commitment to their captives despite a softer market,” Hopkin explained.

The survey also revealed a significant increase in the use of external consultants. A rise in the number of risk functions relying on IT consultants was particularly notable, up from 29% in 2012 to 57% in 2014. There was also increased use of lawyers, loss adjusters, engineers and claims handling experts.

“This may reflect the growing complexity of risks companies face,” Hopkin said. “For example, the need for IT specialists is most likely in response to heightened concern about cyber risk, which is an extremely tough challenge for risk managers and companies more generally.”

There has been a steady move upwards in the average salary awarded to risk and insurance managers. Only 32% of Airmic members earn less than £70,000 – down from 48% in 2012 and 54% in 2008. Meanwhile, the percentage of Airmic members earning over £100,000 has risen slightly from 24% in 2012, to 28% this year.

However, although basic salaries have increased between 2012 and 2014, bonuses are less lucrative and as a result the overall remuneration package for risk managers has reduced in several sectors, notably the mining sector which has been overtaken by the leisure, hotel & travel industry as the most lucrative sector for risk managers.

Interestingly, there appears to be a downward trend in the percentage of risk professionals with risk or insurance qualifications. The percentage of members with a CII qualification has fallen from 45% in 2008 to 39% this year. Similarly, 22% of respondents had an IRM qualification, down from 27% in 2008. However, broader business qualifications such as the MBA have increased in popularity.

Other key findings of the survey include:

• Salaries for risk managers have stabilised since 2012. Professionals in their 40s with over ten years’ experience in insurance and/or risk management have the peak earning capability.
• There is a clear relationship between job title and remuneration: chief risk officers earn on average £140,000; a director of risk management earns about £123,000; and the average salary for a head of risk management is about £104,000.
• The role and responsibilities of Airmic members are changing. In particular, it appears that the role of members is expanding into broader risk management issues, including enterprise risk management. 
• The average size of risk management departments is no longer increasing, despite the fact that the range of responsibilities for risk managers is increasing.
• More than 50% of Airmic members have control of a premium spend in excess of £10 million per annum.

The Airmic salary and status survey results are based on 237 respondents, representing approximately 22% of the membership. 

Download the full report here..