The financial sector should be a laboratory for sensible new ideas about incentives – rather than a morgue for dead bonus programmes. So it’s distressing to read that investment banks are lagging behind insurers and retail banks in their efforts to design effective new rewards for their chief risk officers.
CROs are supposed to be the linchpin of tighter self-regulation of post-crisis institutions, at least according to the blueprint prepared by Sir David Walker, the City of London panjandrum. He drew up a report in 2009 on how governance at financial institutions should be improved. But research by Hedley May, a City headhunter, points to a lack of consistency among investment banks in the UK about how to tackle risk officers’ remuneration – and to a worrying lack of individuals who can fulfil all the Walker report’s requirements. Read more