As a matter of fact, the compensation schemes for staff involved in the subprime bubble all had a common feature in that there were enormous rewards for deals but there was also a failure to impose penalty symmetrically when losses occurred.
To put it in a nutshell, a viable compensation scheme should be well structured and be geared to the long term corporate target and strategy rather than short term profit. 2  BIS Review 78/2008  7. I hope my opening remarks on risk management and compensation management will kick off a series of discussions on management of other facets of business.