The Unconventional Skills Chief Risk Officers are Now Seeking

Prospering in the new normal will require a keen focus on the customer and risk management team skill sets that enable organizational agility. Business managers decide daily the risks that are worth taking to meet both short‐term and long-term objectives.

When decision‐makers understand the risks and uncertainties, they can make better decisions. When employees understand the risks and rationale for the business decision, they can effectively manage mitigations and controls.

Simply put, managing fast-moving, disruptive risks boils down to daily business decision‐making. These risks are often interdependent, and risk analysis must therefore not only be agile but also recognize interdependencies and support business decisions.

Last month, we addressed a few of the challenges facing organizations today:

Figure 1: Modern Obstacles

The result of all of the above is that business decisions must be made even faster, with broader inputs. This will mean less bureaucracy and more relevant risk decision‐support.

In this world of complex risks and uncertainty, we should think of the CRO as the chief decision‐support officer. He or she needs scenarios for addressing the complex disruptions, tools for decision‐making under uncertainty and communication skills to crowdsource. Moreover, both traditional and nontraditional skills will be required to support the top risk executive.

CROs: Seeking Talent and Diverse Perspectives for the Risk Roundtable

Beyond the communication and political skills CROs require to navigate successfully, they must surround themselves both with standard risk management know-how and unconventional thinkers; the latter group must have the capabilities required to develop and vet approaches in a disruptive, rapidly-changing environment. Generational, racial, gender and other diversities should be represented at the table.

Figure 2: Nontraditional Skill Sets for CRO Support Roles

Let's now discuss the specific functions of each member of this next-generation CRO support team:

The collaborator “herds cats,” aligns silos to customers, improves existing processes and designs new ones. He or she should have a strategic sense to know when small or radical process improvements are necessary.

The creative analytics problem solver is able to apply standard risk analytics in new ways, and nonstandard techniques to daily decisions.

The change manager executes large projects. He or she should be able to lead transformations with an end-to-end mindset - horizontally, across silos, and focused on customers. Moreover, this individual must create seamless connection of work activities, and rethink ways to meet customer needs. Traits of an effective change manager include leadership, teamwork, courage and emotional intelligence.

The former P&L owner conveys urgency and practical priorities. The innovator, on the other hand, thinks disruptively about changes, and develops responses.

The systems thinker is an integrator across disciplines who attempts to move forward by drawing analogies to fields and approaches that may seem dissimilar. He or she should be well-aligned with the innovator.

The data scientist understands the requirements for systems integration and for much better data quality and analytics, keeping in mind that transformation almost certainly involves understanding new types of internal data, unstructured data and external data. He or she must meet all of these objectives while simultaneously shedding data that does not support required analytics.

The technologist recognizes the potential of emerging technologies and understands the need to adapt them to the specific objectives of the business - as well as to integrate new systems with existing ones.

The naysayer is well-known in just about every organization. When everyone else zigs, they zag. They're comfortable with taking the uncomfortable positions and challenging both the status quo and the degree of change. This tough critic should be persuasive enough to influence others at the table.

The CRO must transform his or her office into a chief decision-support powerhouse through diverse inputs and first-rate analysis. Each member of the risk leadership circle must exert influence, and should be thoughtfully committed to the organizational mission.

In the new normal, the CRO must build a culture that allows members of the risk leadership team to exchange ideas and innovate in a safe environment. Strong interpersonal relationships across the team should be encouraged, and incentives should promote collaboration over hero tactics.

Parting Thoughts

Superlative decision-support depends on how inputs on risks and issues are collected, managed, analyzed and converted into decisions. Inputs must be crowdsourced from all levels inside the organization, as well as from key external stakeholders.

Through collaborations with HR - including bottom-up listening sessions - the risk team can collect and process frank feedback about employee views on safety and wellness at the office, racism, geopolitical unrest and leadership.

The CRO can use the information to perform analysis, gain acceptance for change and support program execution. To survive and prosper through this pandemic, and to meet the challenges of the next existential crisis, organizations must change the status quo in a risk‐informed manner.

Brenda Boultwood is an independent risk management consultant. She is the former senior vice president and chief risk officer at Constellation Energy, and has served as a board member at both the Committee of Chief Risk Officers (CCRO) and GARP. Previously, she was a senior vice president of industry solutions at MetricStream, where she was responsible for a portfolio of key industry verticals, including energy and utilities, federal agencies, strategic banking and financial services. Before that, she worked in a number of risk management, business roles and as the global head of strategy, Alternative Investment Services, at JPMorgan Chase, where she developed the strategy for the company's hedge fund services, private equity fund services, leveraged loan services and global derivative services. She currently serves on the board of directors at the Anne Arundel Workforce Development Corporation.