The Developing Roles of the Chief Risk Officer (CRO)

"It is a debacle," an expression we heard from senior managers facing a business catastrophe the pandemic delivered to the global economy. However, a decade ago, senior managers were asking, "do we need to integrate the ERM in the organization?" Over several years it becomes more apparent that ERM is no longer confined to an exciting management concept but essential management practice. After the 2008 financial crisis, executives began to pile a heap of attention to the ERP as an appropriate part of the cooperate strategy. Senior managers believed ERM's primary purpose is to help increase shareholder value through a greater focus on risk management and capital allocation. Moreover, in the implementation of ERM as a management function, a particular position, the chief risk officer needs to gain a prominent role.

The emerging focus of companies over the position of the chief risk officer (CRO) comes from a serious practice on integrated risk management. Further, the senior manager realized that numerous risk officers in the organization do not make any sense. However, vital questions about the CRO emerge, such as its role, function, and practices.

The CRO and its unit assume an essential role in the firm, stable strategy. In recent years the role of a risk officer maybe dominantly operational to furnish technical input to the decision of the top managers at present CRO in prominent companies assume a significant role in policy and decision making. Notable among the CRO role is assuring that the firm process meets the risk management thresholds for regulators, industry, and shareholders. Further is implementing the integrative risk management framework. The framework must assist the firm in moderate-risk and support the management in allocating capital to increase shareholder value with a full perception of the possible positive and negative risk involved.

The CRO, in meeting the policy-level roles assist the top executives to comprehend the relationship among the different type of risk. As a consequence, the senior executives can consider its decision in the context of uncertainty and about maximizing shareholder value. A well-examined ERM strategy a CRO can manage the firm identified and quantified risk with given capital resources to extract real value to the organization. Generally, the CRO has a set of particular responsibilities that sum to forging a risk-aware culture, which includes central control of the firm's risk evaluation and risk appetite orienting the shareholders with the firm ERM program. Likewise, the CRO must implement a reliable, integrated risk management framework focusing on the operational risk while mitigating risk within the firm overall strategy.

The CRO cannot assume all the enumerated responsibilities. Of course, the CRO needs to cooperate with other risk managers in the firm. However, given the scope and the depth of the CRO role. They need to work with all unit heads in the organization. On top of these, a successful CRO draw into two significant groups: internal audit and strategic planning. The audit provides a vital perspective on compliance. Also, the planning function provides future strategies of the organization the opportunity to contain risk management, and assessment management wanted to take.

The CRO is not confined in a strait-jacket function of risk management. As part of the senior management, the CRO permeates all aspect of the organization and need input from various discipline some are intricate and exhaustive such assumption may require a CRO to be the "analyst." During the earlier days of CRO, the organization expects the person in the position to be a master technician of an esoteric skill. But the role evolved and developed while companies gained significant experience, the role of the CRO shifted. Unanimously prominent companies agreed intelligence and analytical are the primary qualifications of a CRO. After all, a CRO absorb and integrate massive information from a different point in the organization. Senior managers expect the CRO to use a sophisticated model to guide the strategy of the company. Mainly, the most critical role of the CRO is a communicator, leader, project manager, and analyzer. From the time the CRO commenced, the assessment, measurement, and optimizing shape how success the business process will be. Moreover, the CRO, as an integrative thinker, needs a systematic knowledge of all facets of the business. Above all, the CRO must forge a robust partnership with staff, communicate a wide variety of audiences in a comprehensible language, and process group interaction.