Membership in the Global Association of Risk Professionals rose to 175,000 this year from 55,000 in 2006, the group said. At smaller financial companies, pay ranging from $3 million to $8 million is more common, said Tim Holt, who helps recruit risk officers for Heidrick & Struggles in New York.
Some experience as a risk officer or in a similar job is increasingly required for CEO candidates at financial companies, said Tom Flannery, managing director for the Pittsburgh office of executive search company Boyden.
"The risk chief used to be like the human resources leader. You had to have one, but generally speaking, the risk guy was never going to be CEO of the company," Flannery said. "That's changed."
Like A Fad
A client, which Flannery wouldn't identify, set up a succession plan so that when the CEO retires and is replaced, the next candidate in line will serve a rotation in the chief risk officer job as part of training for the CEO job, he said.
"Business, by its very nature, is risky" and the focus on risk managers feels "kind of like a fad" as companies want to show investors they are working to avoid the pitfalls that led to the recession, said Jay Lorsch, a corporate governance professor at Harvard Business School in Boston.
Directors need to ensure they are taking responsibility for setting a real strategy for the executives, he said.
"It's clear that risk has everybody's attention," said Elaine Eisenman, dean of executive and enterprise education at Babson College in Wellesley, Massachusetts, and a director at shoe retailer DSW Inc. and corporate bartering company Active International.
She worked with the CFO and treasurer at one of the companies where she is a director to use a so-called dashboard to communicate the risk related to decisions to the board, ranging from green to red, Eisenman said.
"The meltdown of the market was the first time many people really started to wake up," said Eisenman, who helps educate executives at Babson in management issues. "What the focus on risk is doing is sensitizing people to issues they weren't paying attention to. This is how a board gets blindsided."