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Chief Risk Officer Has Transformed in the New Economy

The chief risk officer (CRO) of an organization is also sometimes referred to as chief management officer.  This officer is the executive who is responsible in enabling effective and efficient governance which have related opportunities and significant risks to a business and its segments.

Risks can be reputational, strategic, operational, compliance or financial related. This officer will be accountable to the company’s Board and Executive Committee to enable enterprises to be able to balance rewards and associated risks.  In larger organizations, this officer will be responsible in coordinating approaches to Enterprise Risk Management.

Among the priorities of a chief risk officer includes ensuring that the organization complied with the mandatory legislations.  The designated officer could also have something to do with topics relating to internal auditing, cooperative investigations, information security, fraud and insurance.

Ideally, a candidate for this position is preferable to have a post-graduate education and should have more than 20 year business experience which is relevant to accounting, legal, economics and actuarial backgrounds.

There can be many factors which have pushed chief risk officer to the frontline, including placing strict standards in practices, more complex globalized business environment and the great potential for losses.  Though, this position has become one of the hottest jobs in the corporate world.

As risks are rising, financial institutions around the world has pushed the CROs forwards in the corporate arena.  Risk management is now recognized as one of the primary keys for competence amidst the economic uncertainty.  With such pressure in the business world, even sectors which are not included in the financial services are now recognizing the importance of CROs in their respective organizations.

Traditional practices for this officer used to be the head of very specific risk functions like being a chief credit officer, an asset or liability manager or a chief actuary.  On today’s business world, a risk manager can aim to be the CRO who shall be reporting directly to the chief executive officer and the board of the corporation.  In fact, there is an increasing number of CROs of have already been in the boardroom in most board meetings.  In general, the chief risk officer is there to centralize the entire risk management and its responsibilities could include the scope of providing the needed information which will be helpful in making decisions to ensure that emerging risks would be included in the corporation’s strategic agenda.  With that fact be known, the CRO is undeniably one of the most important officers in today’s business world.

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