The role of the chief risk officer (CRO) is in flux, and the successful CROs of the future will tackle big risks, and influence company-wide.
From its original roots in the financial services sector, the CRO function is becoming increasingly relevant to a wide range of sectors as the risks facing businesses grow ever more complex.
“The role of the CRO has evolved and continued to move from the traditional risk types that were and are still mandated by the regulator, to other types of risk that are more forward-looking, or emerging,” said Alessandro Vecci, senior partner & risk and regulatory consulting lead at Genpact.
In the face of geo-political risks, cyber risks, and technology risks, businesses today face greater challenges and therefore require more from senior executives in managing them, Vecci told Corporate Risk & Insurance.
“From what I’m observing in the market, with the evolution of capabilities, technologies and tools, the risk function is becoming something that is extending in its use to other sectors too. These new capabilities are also allowing the role to have a more strategic function in the organization, by supporting the business and helping achieve the strategic objectives for the company.”
Even within the financial services sector, the focus on regulation, particularly since the financial crisis in 2008, has seen the CRO’s workload change.
“The role of a risk officer of course has always been there, but with changes in regulation it has become more and more prominent in the financial services industry as a ‘must have’ and a necessary element of governance in banks,” Vecci explained. “Banks have been really bombarded in the last 10 years by new requirements, and all or most of them are landing on the desk of the CRO.”
For corporates in other sectors, big issues from political risk to environmental factors are increasingly on the agenda, requiring a risk executive to have a wide world view.
“Whether it’s the Italian political uncertainty, Brexit, or the role of the new LIBOR or of a new currency, all of these geo-political factors could affect not only banks but wider corporates,” said Samir Saurav, partner in Genpact’s European financial services risk & regulatory consulting division.
“Someone has to do a scenario anaylsis there to see what the impact could be, and make a link between business and strategy,” he explained. “Risk plays a very active role in financial services, but I’m sure this is also being done in other corporates, perhaps currently through the chief financial officer, but this could be a future evolving role for CROs in the corporate side too.”