The risk that lies within

Compensation risk reviews can unearth unintended risks and areas in need of attention
By Paul Gryglewicz
|Canadian HR Reporter|Last Updated: 05/06/2013

One of the issues the recent financial crisis highlighted for many people was that ill-designed executive compensation programs can lead to inappropriate risk-taking by executive teams, causing catastrophic losses for an organization and its shareholders.

“Ill-designed” here refers to a level of risk, embedded in an executive compensation program, that is outside of an organization’s risk appetite.

Regulators reacted by mandating that publicly listed companies include, in their proxy circulars, disclosure around compensation risk analysis.