Chief Risk Officer - Explained
What is a Chief Risk Officer?
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What is a Chief Risk Officer?
A chief risk officer refers to an executive mandated to identify, assess, and mitigate threatening events in an organization. This includes threats from within and outside the company that is likely to affect the company's investment. Generally, the CRO oversees the company's overall risk management including the company's compliance with the existing government regulations.
What Does a Chief Risk Officer Do?
The CROs roles keep on changing as the business industry continues to advance in terms of technology. As businesses continue to adopt the new advanced technologies, it is the responsibility of the CRO to ensure the following:
- The information system is well-governed
- The overall business is protected against fraud
- There is the protection of intellectual property
Note that it is also the CROs responsibility to ensure that there is an oversight of internal audits and that the internal controls are developed. Also, he or she needs to ensure that threats coming from the company are identified and dealt with appropriately and in time. This will prevent the business from getting itself into regulatory issues. Generally, the major role of the CRO is to ensure that business-associated risks are reduced. Reduction in risk ensures that the productivity and profitability of the company are not affected in any way. In other words, the CRO is tasked with the responsibility of overseeing the overall leadership of the business risk management.
Typical Duties and Responsibilities of a Chief Risk Officer
It is worth noting that there are no specific defined roles of a CRO. The roles are based on various factors such as:
- The size of the organization: Larger organizations have specific roles for this position separate from that of a chief security officer and chief information officer. However, in a smaller organization where such positions do not exist, there is merging of responsibilities.
- How roles are defined: Also, roles for this position vary from one organization to the other. This, therefore, means that different organizations will have different responsibilities for this position. It all depends on how each organization has defined the roles of its CRO.
However, there are typical duties and responsibilities that a person holding the position of CRO is supposed to carry out. They are as follows:
- Implementation of policies and procedures to ensure that management operational risks are minimized.
- Note that the CRO reports to the executives of the company. It is, therefore, his role to share the risk analyses as well the security progress reports with them. The sharing can also be extended to the board members and employees.
- Development of mitigation measures to be used in minimizing risks or losses in the company. Basically, when policies and procedures are inadequate or missing, it may lead to a business experiencing risks or threats. This usually affects the general productivity and profitability of the company's businesses.
- Ensure that the company's operations comply with the regulatory risk requirements of the state, federal, and local level.
- In any business, there is always appetite risks. It is, therefore, the responsibility of a CRO to advise the company accordingly. He or she may quantify the overall risk and then advise the company on the amount of risk it can take and still be safe.
- Ensure that there is a budget allocation for risk mitigation and management related projects.
- Lead the company in conducting risk assurance and due diligence whenever the company engages in any business deals. For example, the company may be planning for a merger or acquisition. In this case, it is the responsibility of the CRO to conduct an investigation on the target companies. The investigation is majorly on the potential risks that surround the companies and the possible liabilities it pauses to the organization.
- Addressing risks to do with hacking and data breaches (Risk assurance and data protection). In other words, he or she is supposed to prevent unauthorized access to the company's data. This includes employees and customers data which are supposed to be confidential and only authorized individuals can access it.
- Ensure security in the following areas:
- Internal auditing processes
- Finance auditing processes
- Insurance activities
- Fraud prevention processes
- Changes in the global business
- Disaster recovery processes
Which Skills is CRO Supposed to Possess?
For one to be considered as a competent CRO, he or she must possess the following skills:
- Strong communication skills
- Excellent strategic planning skills
- Excellent visionary leadership skills
- Competency in computer systems and networks
- Good coordination and networking skills
- Ability to respond to security issues promptly
Education Qualifications and Experience
Besides possessing outstanding skills, a competent CRO must possess some academic qualifications. However, this also varies depending on the size of the organization and the industry in which it operates. For instance, a CRO in the banking industry will be expected to be knowledgeable in the following:
- Financial-related compliance requirements
- Possible threats associated with monetary transactions
- Fraud prevention measures
However, typical CROs requirements include;
- A masters degree in business administration.
- Business experience with at least 10 years of work experience in the business field of operation.
- Knowledgeable in corporate technology networks and systems. This is essential for companies with digital operations such as mobile and internet banking.
Generally, the CROs major role is to focus on risk mitigation. Nonetheless, dealing with things such as cybersecurity is not an easy task. This is because each day there emerges advanced sophisticated cyber threats. So, however much effort the organization puts in, there is always a possibility of cyber-attack and data breach. It is, therefore, important for the CRO to prepare for such eventualities by developing resilience strategies that will ensure business continuity.
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