Paying no salary and rewarding Kelly only on the basis of RI provides her with incentives to work hard but also subjects her to excessive risk because of uncontrollable factors that will affect RI and hence Kelly’s compensation. A compensation arrangement based only on RI would be more costly for Home Run Sports because it would have to compensate Kelly for taking on uncontrollable risk. A compensation arrangement that consists of both a salary and an RI-based performance bonus balances the benefits of incentives against the extra costs of imposing uncontrollable risk.