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In the previous Blog, we examined the specific challenges Chief Risk Officers (CROs) in the #insurance industry face.
Top of mind was the challenge of delivering “Value Add” activities to the business, over and beyond #regulatory #compliance.
We have long heard about the evolution of the CRO role towards one more commonly referred to as ‘Rev 3.0’. A quick review of recent publications demonstrates this topic has been on the agenda for a number of years:
- The Triumph of the Humble Chief Risk Officer – Harvard Business School (2014)
- Paths to Prosperity: Global Risk Management Study: Insurance Report – Accenture (2015)
- A focus on value creation and regulatory oversight: Insurance CRO survey – EY (2015)
- The evolution of the Chief Risk Officer – a future CEO? – hoggettbowers (2015)
- The Post Financial Crisis Chief Risk Officer: The Teenage Years – Hedley May (2015)
- Internal Model Industry Forum: Role of the Chief Risk Officer & Chief Actuary – Institute of Risk Management (2015)
- Rebooting the role of the CRO – InsuranceERM (2016)
- Worth a seat at the table? Redefining the role of the insurance CRO – Institute of Risk Management (2016)
- CRO Survey: Insurance Risk and the Influence on Business Strategy – River Partnership (2017)
- Regulation no more: CROs are reborn as innovators – InsuranceERM (2017)
- View from the top: The CRO and risk team of the future – InsuranceERM (2017)
- Taking the Wide-Angle View:The Changing Role of the Risk Professional – PwC (2018)
- Times are changing: The demise of the old style Chief Risk Officer – Norman Broadbent (2018)
Impact of challenges on the CRO role?
If the challenges have been known for some years, what has the impact been on the CRO role? The requirement for CROs to influence #Business #Strategy and #Performance #Improvement. More than ever before CROs see their role as providing a forward-looking and commercial lens to support delivery of the Business Plan.
Pressure on CROs to help their firms “win in a tough trading environment” has never been greater.
But when you dig deeper, beyond the initial discussion of #capital coverage ratios and target #capital buffers, questions are raised as to whether there is sufficient interaction between the #Enterprise Risk Framework Framework (#ERM) (including better articulation of Stress and Scenario Testing ‘triggers’) and impact on the Business Plan? Furthermore, how can this work help root out Business Plan #assumptions and #vulnerabilities that might be poorly understood?
There is no doubt the CRO role has reorientated towards a more forward-looking and commercial outlook. The challenge is whether this has resulted in the investment of time and effort into deepening our understanding of the interaction points between the ERM Framework and Business Strategy and Performance?
Whilst I’m sure there are a great many technicians who can demonstrate the financial impact of modelled scenarios on plan, the real challenge is how do take this up 10 levels and illustrate this interaction in a simple and compelling manner?
Perhaps the real lesson to be learnt is how we can make the process even more user (business) friendly and produce outputs that are visual, simple and engaging?
Darren provides Enterprise Risk Management advisory services to the Insurance and Investment Management sectors. Helping Board and C-level executives address strategic challenges, by delivering solutions that create Enterprise Value and improve business performance.
Darren is an experienced executive with over 20 years’ global experience with multinational companies, including Chief Risk Officer reporting to the Board.
Darren is an Honorary Visiting Fellow of the Digital Leadership Research Centre, Cass Business School where he also holds an Executive MBA. Darren is a Certified Fellow of the Institute of Risk Management (CFIRM) and Chartered Insurance Risk Manager (ACII) of the Chartered Insurance Institute.
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