Compensation and Market Trends

Mid-Year Report 2016Risk

Welcome to Barclay Simpson’s 2016 Risk Management Compensation and Market Trends ReportBarclay Simpson has been producing corporate governance market reports since 1990. We use our Mid-Year Report to update our Annual Report and as an opportunity to focus primarily on compensation. This report seeks to provide insight and guidance into compensation within risk management. This is supported by a comprehensive survey of risk management professionals registered with Barclay Simpson in June 2016. Clearly the respondents are not entirely representative as they are risk managers who are registered with a recruitment consultancy and who have taken time to complete the survey. There are no doubt many risk managers who go through their entire career without doing either. Nonetheless, the results make interesting reading and comparisons with previous years provide useful insights into changing shifts in risk management. Comparable reports exist for all other areas of corporate governance. They can be accessed in section 6 of this report (“About Barclay Simpson”) or at www.barclaysimpson.com.

We place great value on the professional reaction to our reports and would appreciate your comments and any requests for further clarification or information.

BARCLAY SIMPSONCOMPENSATION AND MARKET TRENDS REPORT

2016RISK

CONTENTS

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DisciplinesInternal AuditRiskComplianceSecurity LegalTreasury

1 ExECuTIvE SuMMARY p 12 MARKET ANALYSIS p 23 MARKET COMMENTARY p 34 SALARY GuIDE AND COMPENSATION SuRvEY p 4 4i KEY CONCLuSIONS p 5 4ii OvERvIEW p 64iii GENERAL RESuLTS p 104iv SALARY GuIDE p 21

5 ABOuT BARCLAY SIMPSON p 24

Living with Brexit uncertaintyAt the start of 2016 we reported that the risk recruitment market had slowed. Even though our client survey reported that 55% of risk departments did not have the resources to meet the demands made upon them, only 52% reported they had attempted to recruit in the last six months. Furthermore, 23% reported that they were unlikely to recruit in 2016, significantly up from only 5% the previous year. These responses confirmed our own day to day experience. The reason for this slowdown was largely due to the banking sector, which remains the largest employer of risk management professionals. There have been job losses across investment banking, with UK and European banks cutting their costs in response to lower trading volumes in fixed income, currency and commodities. Many have looked to withdraw from uneconomic business lines and cut their costs, along with hundreds of back office workers.

In spite of this backdrop the demand for risk managers was buoyant at the start of 2016 with vacancies across all areas of risk. However, this noticeably slowed in the run up to the Brexit vote. Like many others in the recruitment industry we were anticipating that the demand suppressed by the uncertainty of Brexit would result in an uptick in demand as the vote was settled in favour of the status quo. Clearly this did not come to pass and the result has only increased the level of uncertainty. For both clients potentially looking to recruit

and candidates looking to change job the result increases the value option, at least in the immediate aftermath, of doing nothing.

Banks more exposed?Our expectation, provided a serious economic reversal can be avoided, is that the broader financial services recruitment market will live with the uncertainty caused by Brexit. Unfortunately the banking sector and, particularly Tier 1 banks based in London, are potential victims of strategic decisions that may ultimately reduce the number of risk managers employed. However, there may be some comfort that many of these banks were already rationalising before Brexit.

The consequences of Brexit will no doubt have become clearer by the time we produce our annual market report at the start of 2017. In the meantime, as usual, this report focuses on compensation and the results of our annual survey. Our survey was conducted before Brexit and it is likely that some of the sentiments expressed in it may have subsequently changed. The compensation data will not.

Survey data mixedAt the start of 2016 real earnings and overall employment numbers were still growing strongly. This was reflected in our survey to the extent that the average salary increase achieved by risk managers staying with their employer rose from 7% in 2015 to 8% in 2016. However salary increases achieved by risk managers changing job fell from 19% to 17%. Although the percentage of risk managers reporting they were not working remained flat, the average period of unemployment

rose. 78% reported it was more difficult to secure work than they had anticipated. Perhaps not surprisingly fewer risk managers also reported they had changed job in the last year, down from 28% in 2015 to 24%.

How risk managers feel? In this year’s survey we have included some questions about how risk mangers feel. Whilst there was a strong sentiment that their skills are becoming more valuable, 27% of risk managers reported they felt less secure than a year ago, weighed against the 20% who felt more secure. Although salary is important to risk managers in terms of what they would most like to change about their job, career development was the standout choice. For managers looking to retain their staff, this may well be a sentiment they should recognise and look to act upon.

ExECuTIvE SuMMARY1

1

At the start of 2016 real earnings and overall employment numbers were still growing strongly. This was reflected in our survey.

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MARKET ANALYSIS2

Vacancies

vacancy generation slows further 2016 started strongly in terms of vacancy generation, although by the second quarter the market had slowed significantly. Concerns over Brexit were coming to the fore and adding to pre-existing concerns over growth in the global economy, regulatory capital costs, deleveraging and the need to divert investment into areas such as Fraud, Conduct, Regulatory Risk and Treasury. As a result, vacancies were withdrawn or put on hold and risk managers who left were not automatically being replaced.

vacancies were most notably down in banking, although one bright spot has been the regulatory inspired adoption of risk management by the subsidiaries of international banks. They typically operate in corporate lending, trade finance, private banking and consumer finance and target risk managers with ICAAP, ILAAP and RRP experience. However, many larger banks were notable by their absence from the recruitment market. Vacancies were also commonly for junior positions across Credit, Market and Operational risk with far fewer of the more senior roles that usually characterise the market. This reflects a desire to control costs by promoting internally and backfilling the resulting more junior vacancies. Whilst we are not assuming an immediate recovery in vacancy generation, post Brexit there has been an up tick in activity. No doubt the financial services industry will come to terms with Brexit. Economic and political stability will asssist this process.

Rate of placements

Rate of placements declining To provide a better insight into the dynamics of the risk recruitment market, this graph plots the rate at which placements have been made across the last four years. The graph demonstrates the rate at which candidates are being offered jobs which are then accepted.

We reported at the start of the year that the rate of placements had been falling for two consecutive quarters. Whilst there was a modest uptick in the first quarter of 2016, the rate of placements has again fallen back. A decline in the rate of placements is typical when a recruitment market becomes more cautious and slows. From our perspective as recruitment consultants, it is manifested by; interminable recruitment processes, candidates being rejected for irrational reasons that appear more like excuses, offers not being signed off or ones that are unrealistically low. Equally many vacancies that clients are keen to fill face difficulties. For junior roles there are fewer candidates with the skills required. In demand risk managers with quantitative skills, retail credit risk managers and those with solid 2nd line of defence experience remain in short supply. Counter offers are also common as companies are not only loathe to lose valuable risk managers but may have concerns that they potentially will not be allowed to replace them if they leave.

2

- Placement rate

- New vacancies- Outstanding vacancies

3

MARKET COMMENTARY3

Companies still need to recruitThe risk recruitment market is a more uncertain place than it was a year ago and given the result of the Brexit vote it is likely to remain so. Whilst our own metrics such as vacancy generation and rate of placements have clearly turned down, Brexit will now become a longer term source of uncertainty which we anticipate the wider financial services industry and risk recruitment market will adjust to and come to terms with. Companies will still need to recruit and risk managers will still need to change jobs.

Our survey was conducted before Brexit but in the full force of the uncertainty prior to the vote. What is striking is the importance risk managers place on career development. According to our survey it was the main reason risk managers changed job and was by far the most significant change they would like to make to their existing role.

Risk managers feeling secureWhilst career development is clearly vital to risk managers it was comforting that job security did not register as a significant driver in their motivation to enter the recruitment market, particularly given we asked two new questions this year. First, ‘did risk managers feel more secure than a year ago?’ and secondly, ‘did they perceive their skills were becoming more or less valuable’? 27% of respondents felt they had become less secure, which was broadly consistent across sectors and specialisms although spiked for risk managers working in retail banking. However, 63% of risk managers

believed their skills had become more valuable which rose to 91% of those risk managers working in regulatory risk. Only 10% of risk managers believed their skills had become less valuable.

Redundancies remain lowAt 4%, the percentage of risk managers reporting they are not working is no different from a year ago. Whilst cutbacks in Tier 1 banks have resulted in redundancies, these are currently, as they have been for a while, concentrated amongst senior level credit risk managers from corporate and investment banking backgrounds. Their most likely source of employment is in other sectors such as asset management or insurance, or even outside of the financial services industry. Whilst they may have historically found employment as CROs in smaller banks, given the regulatory demands, this is no longer viable.

Risk managers generally realisticThe average salary increase achieved by risk managers changing job has fallen from 19% in 2015 to 17% in 2016. Whilst there are any number of examples where risk managers have achieved significantly higher and indeed lower increases, there is a substantial amount of realism amongst both clients and candidates. The fall in the average salary increase achieved by risk managers changing job is evidence of this. Companies broadly recognise that in some areas of risk there are genuine shortages. In response they either have to take a more practical approach to the skills and experience they are seeking or they need to increase the salary they

are prepared to offer. For candidates changing job is not usually about salary but career development. Clearly for those with ‘in demand’ technical skills and the desired interpersonal skills and who are under no pressure to move, significant salary increases are being achieved. However, most risk managers understand it is a competitive market and have realistic expectations.

Staff retentionIn this year’s survey we also gave risk managers the opportunity to share what they might like to say to their employer. There was not a clear simple message. Although risk managers may be realistic regarding their salary expectations in the recruitment market, there were a significant number of comments expressing dissatisfaction with their compensation, ranging from base salaries, bonuses and other benefits. This was already evident from our survey where 55% of risk managers expressed dissatisfaction with their remuneration.

Given departmental budgets, there is little most CRO’s can do about the remuneration they are able to offer their staff. However, career development was a common theme, as was the need for greater recognition and better management. A more dynamic approach to risk management was cited, together with the need to welcome good ideas and change.

Given the underlining greivances, if staff retention is a measure of any risk departments success, then promoting open lines of communication where staff can express their concerns, rather than looking for another job, could prove to be a worthwhile initiative.

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This Mid-Year Report includes a significantly expanded section on salaries and compensation, designed to give a much fuller picture of overall remuneration.

Most risk managers are keen to know their market worth. This is not always easy to address. Two otherwise similar risk managers may enter the recruitment market and accept materially different salaries. We provide this caveat because we are aware that the risk management recruitment market is sufficiently diverse that it defies simple categorisation. However, risk managers and their employers want guidance and this is what we attempt to provide.

As recruitment consultants we are involved in the negotiations that take place between employers and prospective employees. We are aware that whilst salary is usually the most important consideration, a number of others factors go to make up total remuneration. In addition to the data we gather from the placements we make and the recruitment work we do, including contact with risk and human resources departments about salary and other benefits, we have also conducted a Compensation Survey to provide specific detail on all different types of remuneration within risk management.

The Survey was of risk managers registered with Barclay Simpson and was conducted in June 2016. It generated several hundred responses.

Covers both permanent and contract marketsIn addition, we also conducted an Interim Compensation Survey focusing on the contract market. We have incorporated the key findings into this report to make it as easy as possible to understand the full picture for risk management.

We hope that you find the results interesting. This report provides the key highlights of the Survey. If you would like more detail about your specific sector or role, please call Adrian Simpson on 020 7936 2601 (as@barclaysimpson.com).

This section is broken down into 4 parts:

1. Key Conclusions – Key conclusions from the Risk Management Compensation Survey

2. Overview – Commentary on the major trends in salaries and other benefits paid to risk managers

3. Compensation Survey – Results of Compensation Survey completed by risk managers

4. Salary Guide – Guide to salaries for specific risk roles and positions

Risk2016 SALARY GuIDE AND COMPENSATION SuRvEY

4

5

Recruitment activity downp 24% of risk managers have changed job in the last 12

months, down from 28% in 2015

p At 55%, career development remains the most important motivation for entering the recruitment market

Mixed messages on salaries p Average salary increase for risk managers staying with their

employer up from 7% to 8%

p Average salary increase for risk managers changing their employer down from 19% to 17%

Work / life balance increasingly importantp Work / life balance as a motivation for moving has become

more important (up from 9% to 20%), at the expense of salary (down from 31% to 19%)

p Risk managers working flexibly up fractionally to 63%

p Desire for even more flexible working at 70%

Other benefits add nearly 45% p At 87% bonuses almost universally paid and at 28% of base

salary significant in value

p Additional pension benefits received by 77% and overall pension benefits are worth nearly 11% of base salary

p As in other areas of corporate governance, the average value of other benefits has dropped, but at £5,400 remains substantial

Despite remuneration increases, satisfaction downp Drop in the level of satisfaction with current level of

remuneration from 57% in 2015 to 55%

value of skills increasingp Strong consensus that value of skills increasing, with just

10% feeling they are decreasing

p 27% feeling less secure than a year ago, 20% more secure

Slight drop in percentage of women p The percentage of women working in risk has dropped

from 21% in 2015 to 20% in 2016

p Women now almost as likely to be managers as men

p No material difference in the average time spent in risk management between men and women

Tougher in the contract marketp Only 24% of contractors in work believe the market for

their skills is improving, down from 43% in 2015

p 58% of out of work contractors are finding it more difficult to secure a contact than they anticipated, up from 43% in 2015

The results of the Barclay Simpson 2016 Risk Management Compensation Survey reveal risk managers becoming marginally less satisfied with their compensation. However the attitudes and rewards of risk managers between different sectors, regions, genders and other classifications are many and various. We hope you find the results interesting.

4iKey Conclusions

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Q - What was your primary motivation for looking for another job?

Motivation for potentially entering the recruitment marketWe asked this question for the first time last year. It is useful to have comparatives and the response this year is consistent with last year. Whilst career development remains the most likely reason, 30% of risk managers cite salary, up from 19% who have actually changed job. We suspect that salary is a bigger motivation “post move” than risk managers are prepared to admit.

Q - If you were to look for another job or go for an interview, what would be the most likely reason?

Motivation for entering the recruitment market This analysis looks at what the primary motivation was for risk managers who have changed employer in the last 12 months. Whilst career development remains the key driver, there has been a significant shift between salary and a better work / life balance. Whilst we assumed last year that as the economy and financial services industry continued to grow, salary would become more important, as a motivation for entering the recruitment market it has declined. There is possibly a growing sense of realism shared by both candidates and clients.

Whilst job security as a motivation to enter the recruitment market remains low, there was a significant divide between managers and non-managers. Whilst 15% of non-managers were concerned about job security, the figure fell to only 1% for managers. As the potential ramifications of Brexit start affecting the financial services industry and particularly the banks, job security will most likely become a more prevalent motivation. Women are becoming more focused on career development with 62% citing it as their principal motivation for entering the recruitment market and were surprisingly rather less concerned about salary.

As we commented last year and, although only restricted to the comments section of our survey, a common refrain in both the risk and other corporate governance surveys was an interest in part time work. We have been aware for some years that many older, less salary conscious corporate governance practitioners, regularly give up permanent work and become contractors to enable them to work on their own terms. Employers should perhaps take note that there is potentially significant latent demand for part time work.

Whilst salary is not the primary motive for most risk managers seeking another job, they will not unreasonably use a move as an opportunity to better their salary. Our survey indicated that 68% of risk managers who had changed employer in the last 12 months were now content with their salary, against only 49% who had not changed employer.

4iiOverview

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Salary increases achieved by risk managers who stayed with their employerAccording to our survey, the average increase for risk managers who stayed with their existing employer increased from 7% to 8%. Given the low rates of inflation and even the brief flirtation with deflation, an average increase of 8% exceeds growth in salaries in the wider economy. However our average includes promotions and the buy backs that are not uncommon when valuable risk managers look to resign, an event not only often marked by the offer of a higher salary but also a bigger role.

Q - What best describes your salary increase in the last year?

What is surprising from our survey is the high percentage of risk managers who report they have received no salary increase at all. Looking back, whilst it was a startling 43% in 2013, it is none the less surprising that the figure has risen from 16% in 2015 to 26% in 2016. This phenomenon is not unique to risk management and, to varying degrees, it is common across all areas of corporate governance. The answer may well lie in those employers who rcognise that where risk managers do not have marketable skill sets, they do not have to offer salary increases to retain them. We can only speculate what this might do for a risk managers’ motivation. It does however go some way to explaining the high percentage of risk managers reporting they are dissatisfied with their salary.

Salary increases achieved by changing employer The survey indicates that the average salary increase achieved by risk managers changing job is 17%, down from the 19% achieved last year. What is clear is that over a five year period the percentage increase has only moved between 16% and 20%. It is possibly only to be expected that the percentage increase has to a substantial extent moved with the broad sentiment and strength of demand within the risk management recruitment market.

There remains a significant difference between the 17% increase in salary achieved by those changing job and the 8% average achieved by those who stayed with their existing employer. However, analysing the average, as we have done for the last two years reveals a wide range of outcomes. It is particularly instructive that whilst 17% may be taken as the average, only 36% of risk managers actually accepted a salary increase between 10% and 20%. There are a wide range of considerations that go into the decision to accept a position and whatever the resulting salary increase, the results of our survey indicate it is unlikely to be the average of 17%.

Q - Which best describes how your current salary compares to your salary in your previous role?

The main differences between 2015 and 2016 are both the fall in the number of risk managers who have achieved salary increases over 40% and the rise in the number who have been prepared to move for less or the same. It belies what many might otherwise believe to be a recruitment market where runaway salary increases are universal.

June 2012

June 2013

June2014

June2015

June 2016

16% 19% 20% 19% 17%

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Whilst relocation or even redundancy represents an obvious reason to move and accept a lower salary there are other reasons. Senior risk managers need to ensure their skills remain current and marketable and a job move / change of employer can make that possible and worthwhile, even at the short term cost of a lower salary. Equally there are those who are not seeking a bigger job but simply, in their terms, a better job. A new role might involve a shorter commute, improved work / life balance or avoiding the responsibility and corporate politics that bigger jobs often require.

Men secured higher salary increases than women which might be expected to the extent that women were less motivated to change job for salary reasons. Managers as usual secured higher percentage increases than non-managers.

What the analysis does again reveal is the huge disparity that some companies are prepared to pay for risk managers with in demand skill sets and particularly for those who combine them with commercial savvy and effective communication skills.

Satisfaction with salaryAlthough salary increases in 2015, both from staying put or changing employer are broadly consistent with previous years, risk managers are currently marginally less likely to feel adequately compensated. The percentage of risk managers who claim to be satisfied has fallen from 57% in 2015 to 55% in 2016. The general results section reveals some wide discrepancies between different sub-groups.

Salary v Remuneration Base salaries always catch the headlines, however offers of employment invariably include other benefits which can often form a substantial part of overall remuneration. We will use this opportunity to provide an overview of the other benefits that risk managers might expect to receive.

BonusesSurprisingly perhaps the average level of bonus mirrored the rise in base salaries, rising from 25% in 2015 to 28% in 2016. Bonus levels vary widely as can be seen from the general results section. Overall 87% of risk managers reported they worked for an employer that paid a bonus, down from 92% in 2015. Of those who received a bonus, 29% reported an increase with 23% reporting a decrease. We do not anticipate this increase will be sustained in 2016 and are surprised that bonus levels have actually increased. Bonuses, whilst potentially a good way of retaining and motivating staff, are almost invariably an inefficient way of attracting them.

Bonuses are often non-contractual, often discretionary and may be paid on the basis of corporate or personal performance or a combination of the two. There can also be a qualifying period.

An issue with bonuses is that whilst a risk manager entering the recruitment market who has benefited from a bonus may add it to their base salary in terms of what they earn, they are more inclined to discount bonuses when discussing expected salary. This goes some way to explaining what can otherwise be relatively high increases in the base salaries achieved by risk managers moving between employers.

Bonuses vary considerably. From our survey, 29% reported they received a bonus in excess of 30% of their base salary and 9% received over 60%. The typical bonus that 27% of risk managers received was between 10% and 20%.

Bonuses in risk management make up a more significant portion of remuneration than in other areas of corporate governance surveyed by Barclay Simpson.

Pensions Given work-place pensions have now become mandatory there is little point asking risk managers if they are entitled to an employer pension contribution. In 2016 we have therefore asked if their employer paid above the statutory minimum. 77% reported they did with an average employer contribution of 11%, which was an increase from 10% in 2015. Larger employers are generally more willing to pay higher contributions. The most likely employer pension contribution is the one received by 24% of risk managers who benefited from a contribution of 7.5-10%, whilst 69% fell in the 5-15% range.

For new recruits, final salary pensions no longer exist in the private sector. Those who still benefit from these appreciate their value and the cost of giving them up to join a new employer can be prohibitively expensive. Pension schemes in the private sector are invariably money purchase where the employer commits to making a contribution based on a percentage of salary.

Whilst there can be a short qualifying period before contributions commence, work place pension legislation requires all companies to enrol an employee in a pension scheme within three months of employment commencing. For those who elect to stay enrolled, minimum employer and employee pension contributions based on an employee’s salary are now mandatory. Most companies pay above these minimums based on a fixed percentage of an employee’s base salary. The employee may or may not be required then to match it. Frequently employers will be prepared to match additional contributions made by the employee up to a fixed percentage. The percentage may increase both with the age of the employee, their length of service and management status.

Other benefitsCars or car allowances have become less common. They can still be expected where a role requires significant travel and also for senior hires. In terms of overall remuneration, a car allowance is frequently offered in lieu of a car and is often considered as non-pensionable salary when evaluating overall remuneration. A more common benefit for those working in London is a location allowance. This is a supplement for those working in London to cover the increased cost of either living in or commuting to London. The most valuable other benefit is Critical Illness Cover which is expensive to provide and is usually restricted to senior roles. However, Private Health Insurance is common and is often extended to all immediate family members.

Life Assurance, usually linked to a pension scheme, is normal, as is payment of at least one professional subscription. Other benefits may include season ticket loans, gym membership, subsidised dental care, personal and accident insurance and staff discounts. These are generally low value benefits.

84% of risk managers reported they received other benefits in 2016 with an average value of £5,400. As was common with other areas of corporate governance this was down from £7,800 in 2015. Managers are more likely to receive higher value benefits and larger companies are more likely to pay them.

Holiday entitlement The average holiday entitlement risk managers benefit from remains at 27 days, the same as in 2015. The most common holiday entitlement is 25 days’ holiday (36% of those surveyed) with 54% reporting between 24 and 27 days’ holiday. 9% of risk managers have less than 24 days, down from 8% last year. Holiday entitlement, regardless of sector, is more likely to be enhanced by the number of years worked rather than seniority. As a strategy it represents a good way of rewarding loyalty and retaining staff but a poor way of attracting new employees.

An increasingly popular benefit is to provide employees with the opportunity to buy additional holidays. This is usually limited to an additional 5 days and would be purchased through salary sacrifice.

Flexible working Flexible working is the opportunity to vary your hours of work or to work from home and is clearly popular. 63% of risk managers reported that they benefit from some form of flexible working up from 62% in 2015. Flexible working appears to be something that risk managers are more prepared to negotiate on when changing jobs. The results of our survey indicate that risk managers who have not changed job are more likely to benefit from flexible working than those who have not. Our survey also indicates that women are more likely to benefit from flexible working as are managers and those working for large companies. Comments made by risk managers and other corporate governance practitioners make clear that flexible working is a highly valued benefit. In a competitive recruitment market companies looking to recruit should be prepared to recognise this. In our survey 70% of risk managers would like the opportunity to work more flexibly.

Employers are ultimately more concerned with output rather than simply attendance. Flexible working is an effective means of retaining staff and few employees once they have benefited from it, would be prepared to give it up. We anticipate that this will ultimately become a more universal benefit.

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The composition of the sample ranged across all areas of risk management. Here are some key statistics:

Sample

p According to our survey, the proportion of women working in risk fell marginally

p Slightly fewer women responding to our survey have commenced working in risk in the last two years

p Significant increase in respondents reporting they have management responsibility

p Almost no difference between men (66%) and women (64%)

p Managers on average have 12.4 years’ experience versus non-managers 10.4 years

4iiiGeneral Results

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Q - Are you currently working?

No change in proportion not working

p Percentage of risk managers not working remains at 4%, no change on 2015

p The average length of time that risk managers are out of work is rising, up from 3 months in 2015, to 4 months in 2016

p 78% of out of work risk managers are finding it more difficult to find a new job than they anticipated, up from 63% in 2015

Q - Have you changed employer in the last 12 months?

Recruitment activity

Fewer risk managers report changing job

p Risk managers are less likely to have changed job in the last 12 months

p No material differences between men and women, managers and non-managers, although risk managers in London are more likely to have changed jobs than those outside of London

p Only 11% of risk managers working in retail banking have changed job versus 35% working in private banking and brokerage

p At 11%, credit risk managers are the least likely to have changed job whilst 34% of operational risk managers reported changing jobs

Q - How long have you worked in Risk?

General findingsSignificant increase in average level of experience

p The average risk manager has worked in risk for 11.5 years in 2016 v 10.5 years in 2015

p 58% of risk managers have worked in risk for over 10 years (90% for 6 years or more)

p London 11.2 years v 12.9 years rest of uK p There is now no difference between the average

length of time men and women have worked in risk management

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p No major differences between 2015 and 2016, although there is a slight increase in risk managers looking for a better work / life balance

p There is now slight concern about job securityp Salary marginally less important for risk managers

working outside of Londonp Work / life balance and salary becoming more

important for women at the expense of career development

Q - If you were to look for another job or go for an interview what would be the most likely reason?

Sub-group Career Development

Salary Work / Life Balance

Job Security

Men 52% 29% 15% 4%Women 39% 36% 25% 0%Managers 53% 27% 19% 1%Non-managers 44% 34% 15% 7%London 47% 33% 17% 3%Rest of UK 56% 23% 18% 3%Overall average 50% 30% 17% 3%

Q - What was your primary motivation in looking for another job?

p Career development remains the most important motivation, although work / life balance has become significantly more important at the expense of salary

p Rise in the percentage of women moving for career development reasons

Career development still most important

Sub-group Career Development

Salary Work / Life Balance

Job Security

Men 54% 20% 20% 6%Women 62% 11% 24% 3%Managers 50% 22% 27% 1%Non-managers 60% 15% 10% 15%London 54% 20% 18% 8%Rest of UK 60% 10% 28% 2%Overall average 55% 19% 20% 6%

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Q - Which option best describes your salary increase in the last year?

Average salary increase for non-movers 8%

p Average base salary achieved by risk managers staying with their employer increased from 7% in 2015 to 8% in 2016

p Highest increase in regulatory risk at 10%

Sub-group Salary Increase 2016

Investment Banking 7% Corporate Banking 6%Retail Banking 6%Asset / Wealth Management 7%Insurance 9%Consultancy 9%Credit Risk 5%Enterprise Risk 7%Operational Risk 9%Market Risk 8%Quantitative Risk 8%Regulatory Risk 10%Overall average 8%

Q - Which band best describes your base salary?

Salaries

Average base salary in survey £110,200

Sub-group Average Salary

Men £112,900Women £102,600Investment Banking £116,200 Corporate Banking £111,900 Retail Banking £97,600 Asset / Wealth Management £128,400Insurance £95,400 Consultancy £102,800 Overall average £110,200

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Q - Overall do you believe you are adequately compensated?

Slight decrease in satisfaction with remuneration

p Decrease in satisfaction with remuneration - down from 57% to 55%

p Greatest satisfaction in retail banking and insurance

p Credit risk managers least likely to be satisfiedp Men and managers more likely to be satisfied

Sub-group Satisfied with remuneration

2016

Men 56%Women 51%Managers 58%Non-managers 51%Changed employer (12 months) 68%Not changed employer 49%Investment Banking 44%Corporate Banking 57%Retail Banking 68%Asset / Wealth Management 54%Insurance 70%Consultancy 54%Credit Risk 43%Enterprise Risk 66%Operational Risk 67%Market Risk 48%Quantitative Risk 68%Regulatory Risk 56%Overall average 55%

Q - Which best describes how your current salary compares to your salary in your previous role?

Average salary increase for job movers drops to 17%

p Average increase achieved by risk mangers changing job was 17%, down from 19% in 2015

p Men on average benefited from higher increases than women (18% v 14%)

p Managers on average benefited from higher increases than non-managers (18% v 14%)

p 24% moving for less or the same is down on 2015 and will include a number moving for quality of life, defensive reasons or those looking to relocate

Sub-group Salary Increase 2016

Men 18%Women 14%Managers 18%Non-managers 14%Credit Risk 10%Enterprise Risk 16%Operational Risk 17%Market Risk 24%Quantitative Risk 13%Regulatory Risk 11%Overall average 17%

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Q - Which of these as a percentage of your salary best describes your last bonus?

Level of bonuses increases to 28%

p Average bonus increased from 25% in 2015 to 28% in 2016

p Highest average bonuses in the asset / wealth management sector

p Lowest bonuses in the insurance and consultancy sectors

Sub-group % Bonus 2016

Managers 30%Non-managers 25%Large companies 25%Medium sized companies 30%Small companies 28% Investment Banking 28%Corporate Banking 30%Retail Banking 30%Asset / Wealth Management 36%Insurance 21%Consultancy 21%Overall average 28%

Sub-group Paid Bonus 2016

Large companies 92%Medium sized companies 80%Small companies 74% Investment Banking 95%Corporate Banking 84%Retail Banking 77%Asset / Wealth Management 89%Insurance 94%Consultancy 74%Overall average 87%

p Fall in the number of companies paying bonuses versus 2015

p Large companies and investment banks most likely to pay a bonus

Q - Does your employer pay a bonus?

BonusesFall in number of companies paying bonuses

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Q - What is the approximate monetary value of any other benefits such as health, travel or car allowances?

Other benefits

Drop in average value of other benefits

Sub-group value of Benefits

Managers £6,200Non-managers £4,000Large companies £5,800Medium sized companies £5,100Small companies £4,800Investment Banking £5,800Corporate Banking £4,900Retail Banking £5,300Asset / Wealth Management £5,200Insurance £5,600Brokerage £2,400Consultancy £5,600 Overall average £5,400

p Average value of other benefits has dropped to £5,400 in 2016

p value highest in investment banking and large companies

Q - What contribution to your pension as a percentage of your salary does your employer make?

Average contribution up to 11%

Sub-group Contribution

Managers 11%Non-managers 10%Large companies 11%Medium sized companies 10%Small companies 10% Overall average 11%

p Average pension contribution was 11% in 2016, up from 10% in 2015

p Typical pension contribution in 2016 was 5-10%, received by 36%

p 70% of risk managers receive 5-15%

Q - Does your employer provide you with any pension benefits above the statutory minimum?

Pensions

Additional pension benefits high but not universal

p Larger companies more likely to make additional contributions

Sub-group %

Large companies 79%Medium sized companies 78%Small companies 67% Investment Banking 81%Corporate Banking 81%Retail Banking 77%Asset / Wealth Management 72%Insurance 84%Consultancy 80%Overall average 77%

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Q - Would you like the opportunity to work more flexibly?

Desire for even more flexible working

p Desire particularly strong from women, non-managers and people who have changed job in the last 12 months

Sub-group Desire to Work Flexibly

Men 68%Women 75%Managers 67%Non-managers 73%London 70%Rest of UK 68%Changed employer (12 months) 73%Not changed employer 68%Overall average 70%

Q - Does your employer provide you with the opportunity to work flexibly to any significant level?

Slight increase in flexible working

p Slight increase in flexible working in 2016p Women more likely to benefit from flexible workingp Flexible working highest in retail bankingp Changing jobs appears to reduce the likelihood

of flexible working

Sub-group Flexible Working

Men 61%Women 70%Managers 69%Non-managers 49%London 63%Rest of UK 61%Large companies 66%Medium sized companies 54%Small companies 56%Changed employer (12 months) 60%Not changed employer 63%Investment Banking 56%Corporate Banking 48%Retail Banking 94%Asset / Wealth Management 54%Insurance 65%Consultancy 76%Overall average 63%

Q - What is your holiday entitlement?

Quality of life

No change in holiday entitlement

p Average holiday entitlement remains at 27 days p The most common holiday entitlement is 25 days,

enjoyed by 36% of risk managers p 54% of risk managers benefit from between

24-27 days p Only 9% of risk managers have less than 24 days

and 9% 30 days or more

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Q - Do you feel your skills have become more or less valuable?

General consensus that value of skills is increasing

p Feeling about value of skills strongest in regulatory risk, liquidity risk and operational risk

Sub-group More Same Less

Managers 64% 27% 9%Non-managers 61% 29% 10%Earning > £80,000 64% 26% 10%Earning < £80,000 60% 32% 8%Credit Risk 54% 30% 16%Enterprise Risk 69% 22% 9%Operational Risk 72% 21% 7%Market Risk 52% 40% 8%Liquidity Risk 75% 19% 6%Regulatory Risk 85% 9% 6%Overall average 63% 27% 10%

p Confidence greatest amongst people who have changed job in the last 12 months

p Confidence weakest in operational risk, quantitative risk and amongst non-managers

Q - Do you feel more or less secure than a year ago?

How people are feeling

Declining confidence in job security

Sub-group More Same Less

Managers 23% 49% 28%Non-managers 15% 57% 28%Changed employer (12 months) 36% 39% 25%Not changed employer 16% 56% 28%Investment Banking 18% 55% 27%Corporate Banking 20% 53% 27%Retail Banking 32% 32% 36%Asset / Wealth Management

23% 46% 31%

Hedge Fund 23% 46% 31%Insurance 20% 60% 20%Consultancy 23% 53% 24%Credit Risk 18% 53% 29%Enterprise Risk 23% 52% 25%Operational Risk 22% 48% 30%Market Risk 13% 63% 24%Quantitative Risk 28% 40% 32%Regulatory Risk 36% 37% 27%Overall average 20% 53% 27%

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Q - What would you most like to change about your job?

Career development ahead of salary as the most important issue

p Career development and salary are the most important issuesp Salary especially important to those working in retail banking and consultancyp Career development more important to womenp Work / life balance the most important issue for those working in asset / wealth management

Sub-group Salary Work / Life Balance

Job Content Career Development

Job Security My Manager Recognition

Men 27% 14% 8% 33% 5% 7% 6%Women 24% 9% 15% 38% 2% 3% 9%Managers 22% 14% 10% 34% 4% 7% 9%Non-managers 34% 10% 9% 34% 6% 4% 3%Investment Bank 28% 19% 11% 25% 2% 3% 12%Corporate Bank 33% 12% 8% 37% 6% 4% 0%Retail Bank 45% 9% 9% 24% 6% 3% 4%Asset / Wealth Management 38% 39% 3% 7% 6% 7% 0%Insurance 37% 15% 6% 15% 3% 11% 13%Consultancy 44% 19% 6% 12% 0% 6% 13%Overall 26% 13% 10% 34% 5% 6% 6%

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Q - Do you think the market for your skills is improving or deteriorating?

Q - Do you believe you are adequately compensated?

Q - Are you satisfied with your current contract?

Q - When considering a new contract, what is the most important consideration?

Contractors in work

Q - Are you finding securing a contract more or less difficult than anticipated?

Q - Do you think the market for your skills is improving or deteriorating?

Contractors looking for work

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Barclay Simpson analyses the salary data that accumulates from the placements we make in the uK. This provides a guide to salaries for risk managers.

The salary ranges quoted are for good rather than exceptional individuals and take no account of other benefits in addition to salary, such as bonuses, profit sharing arrangements and pension benefits.

4ivSalary Guide

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RETAIL BANKING - cREdIT RIsK RANGE AVERAGE

Junior Analyst (0-12 mths) £22 – 30,000 £27,000

Analyst (2-3 years) £25 – 35,000 £30,000

Senior Analyst (3-6 years) £30 – 45,000 £40,000

Manager (6-9 years) £40 – 65,000 £57,500

Senior Manager (9-12 years) £50 – 80,000 £65,500

Director (12+ years) £75 – 100,000 £87,500

Head of Credit Risk £100 – 140,000 £120,000

RETAIL BANKING - OpERATIONAL RIsK RANGE AVERAGE

Analyst (0-3 years) £30 – 50,000 £40,000

Manager £50 – 70,000 £60,000

Senior Manager £65 – 100,000 £82,500

Director £85 – 130,000 £107,500

Head of Operational Risk £100 – 200,000 £150,000

cORpORATE INVEsTMENT BANKING - cREdIT RIsK RANGE AVERAGE

Graduate / Junior Analyst (0-12 mths) £35 – 45,000 £40,000

Analyst (2-3 years) £40 – 50,000 £45,000

Associate vice President (3-6 years) £50– 70,000 £60,000

vice President (6-9 years) £70 – 110,000 £90,000

Executive Director / Senior vice President (10+ years) £100 – 130,000 £115,000

Head of Credit £100 – 150,000 £125,000

Chief Credit Officer £150 – 300,000 £225,000

Managing Director £150 – 250,000 £200,000

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cORpORATE INVEsTMENT BANKING - OpERATIONAL RIsK RANGE AVERAGE

Graduate / Junior Analyst (0-12 mths) £30 – 45,000 £37,500

Analyst (2-3 years) £40 – 50,000 £45,000

Associate vice President (3-6 years) £50 – 70,000 £60,000

vice President (6-9 years) £70 – 110,000 £90,000

Executive Director / Senior vice President (12+ years) £100 – 140,000 £120,000

Head of Operational Risk £150 – 300,000 £225,000

Managing Director £150 – 250,000 £200,000

cORpORATE INVEsTMENT BANKING - MARKET RIsK RANGE AVERAGE

Graduate / Junior Analyst (0-12 mths) £40 – 50,000 £45,000

Analyst (2-3 years) £40 – 60,000 £50,000

Associate vice President (3-6 years) £50 – 70,000 £60,000

vice President (6-9 years) £80 – 110,000 £95,000

Executive Director / Senior vice President (10+ years ) £100 – 200,000 £150,000

Head of Market Risk / Managing Director £150 – 250,000 £200,000

pRIVATE BANKING - cREdIT RIsK RANGE AVERAGE

Graduate / Junior Analyst (0-12 mths) £30 – 45,000 £37,500

Analyst (2-3 years) £40 – 50,000 £45,000

Associate vice President (3-6 years) £45 – 65,000 £55,000

vice President (6-9 years) £65 – 85,000 £75,000

Director (9-12 years) £80 – 110,000 £92,500

Head of Credit Risk £110 – 140,000 £125,000

pRIVATE BANKING - OpERATIONAL RIsK RANGE AVERAGE

Junior Analyst (0-12 mths) £25 – 40,000 £32,500

Analyst (2-3 years) £35 – 55,000 £45,000

Associate vice President (3-6 years) £50 – 70,000 £60,000

vice President (6-9 years) £65 – 100,000 £82,500

Director (9-12 years) £100 – 150,000 £125,000

Head of Operational Risk £110 – 180,000 £145,000

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AssET MANAGEMENT - OpERATIONAL RIsK RANGE AVERAGE

Junior Associate (2-3 years) £35 – 55,000 £45,000

Associate vice President (3-6 years) £45 – 65,000 £55,000

vice President (6-9 years) £65 – 100,000 £82,500

Director (9-12 years) £100 – 150,000 £125,000

Head of Operational Risk £110 – 180,000 £145,000

AssET MANAGEMENT - MARKET / INVEsTMENT RIsK RANGE AVERAGE

Associate £40 – 70,000 £55,000

vice President £80 – 120,000 £100,000

Director £90 – 175,000 £132,500

Head of Investment Risk £100 – 200,000 £150,000

Chief Risk Officer £200 – 250,000 £225,000

INsURANcE - RIsK RANGE AVERAGE

Analyst £30 – 50,000 £40,000

Manager £40 – 75,000 £57,500

Senior Manager £70 – 110,000 £90,000

Director £100 – 150,000 £125,00

Head of Operational Risk £100 – 175,000 £137,500

Chief Risk Officer £150 – 250,000 £200,000

ABOuT BARCLAY SIMPSON5Barclay SimpsonBridewell Gate, 9 Bridewell PlaceLondon EC4V 6AWTel: 44 (0)20 7936 2601Email: bs@barclaysimpson.com

Barclay Simpson is an international corporate governance recruitment consultancy specialising in internal audit, risk, compliance, security, business continuity, legal and treasury appointments. Established in 1989, Barclay Simpson works with clients in all sectors throughout the UK, Europe, Middle East, North America and Asia-pacific from our offices in London, New York, dubai, Hong Kong and singapore.

We add value by using our unique focus on corporate governance, our highly experienced specialist consultants and access to both the local and international pools of corporate governance talent. Our strength lies in our ability to understand client and candidate needs and then to use this insight to ensure our candidates are introduced to positions they want and our clients to the candidates they wish to recruit.

For more in-depth coverage, comprehensive reports and compensation guides exist for the Internal Audit, Risk, compliance, Security and Legal recruitment markets. These can be accessed from the links below.

We also produce other specialist reports, each of which can be accessed for free on our website: www.barclaysimpson.com

www.barclaysimpson.com/mid2016markettrends/auditwww.barclaysimpson.com/mid2016markettrends/riskwww.barclaysimpson.com/mid2016markettrends/compliancewww.barclaysimpson.com/mid2016markettrends/securitywww.barclaysimpson.com/mid2016markettrends/legal

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If you would like to discuss any aspect of the reports please contact the following divisional heads:

Corporate Governance Adrian Simpson as@barclaysimpson.comInternal and IT Audit Tim Sandwell ts@barclaysimpson.comRisk Dean Spencer ds@barclaysimpson.comCompliance Tom Boulderstone tgb@barclaysimpson.comSecurity Mark Ampleford ma@barclaysimpson.comLegal Jane Fry jf@barclaysimpson.com

To discuss our international services please contact:Europe Tim Sandwell ts@barclaysimpson.comMiddle East Chris L’Amie cla@barclaysimpson.comAsia Pacific Russell Bunker rb@barclaysimpson.comNorth America Daniel Close dc@barclaysimpson.com