More than half (52%) of organizations currently have a chief risk officer, and another 6% plan to hire one within the next year, according to a new Riskonnect report. The report surveyed more than 300 risk and compliance professionals worldwide about the new threats facing organizations today and how they are revamping their risk management playbooks to navigate uncharted territory. This is a dramatic increase over years past. Until recently, a chief risk officer was a relative rarity. Risk management was rarely invited to the strategy table. Instead, the business of managing risk was relegated to the back office looking after numbers-crunching insurance coverage or regulatory compliance. With the chaos and disruption of the past few years, however, it appears that more companies are recognizing the value of C-level oversight in managing risks at an enterprise level. One of the biggest assets of a CROs is the vantage point to see risk holistically across the organization. They have the expertise – and the clout – to advise the rest of the C-suite about the strategic impact of both insurable and noninsurable threats and offer guidance on how to prepare for and respond to threats. Chief risk officers are also appealing because of their ability to:

  • Act as a uniting force across silos. A CRO can offer an authoritative voice that brings together disparate teams and data and sets expectations for all. In times of trouble, centralized information and organization-wide collaboration can speed up response time – which can provide an invaluable edge in minimizing the impact on the company.
  • Cut through the red tape. A CRO can eliminate bottlenecks that often stand in the way of getting fast, reliable information about risks on which to base strategic and operational decisions. And they have the knowledge and expertise to make those decisions quickly.
  • Set the tone from the top. A CRO’s leadership can help instill the mindset that managing risk is everyone’s job. With more eyes and ears on the lookout, it’s easier to catch issues early before they expand into something bigger.

See what Bob Bowman, chief risk officer at The Wendy’s Company, has to say about the future of CROs

Beyond the C-Suite

Some 82% of respondents said their risk management team headcount has increased or remained the same in the past six months. This expansion – especially against a backdrop of layoffs in other departments, talent shortages, and uncertain economic factors – highlights just how crucial risk professionals are in guiding their organizations through the complexities of today’s risk landscape. But people can’t do it all. Technology provides increasingly important support for these growing risk management teams. Nearly a third of companies (28%) reported budget increases for risk management technology in the past six months, despite current economic conditions. This affirms the value technology plays in managing risk effectively. Technology can automate routine tasks so risk managers can focus on the strategy and actions necessary to help the organization achieve its goals. Each risk team member can get more done – and the output is more trustworthy. For companies looking to invest in risk management technology, prioritize data quality and reporting capabilities. Just 23% of survey respondents say they’re very confident in the accuracy, quality, and actionability of their risk management data. And only 5% are very confident in their ability to extract, aggregate, and report on risk insights to fuel decisions. On the positive side, 7 in 10 respondents said they have adequate collaboration across the different lines of defense for financial risk and 69% said the same about operational risk.

Talent Pressures

Another point to consider is that greater use of technology and larger staffs can help prevent burnout, which was cited as a major factor in increasing risk exposure. Two-thirds of survey respondents reported that an increase in burnout leads to mistakes and shortcuts. That’s not surprising since fewer people mean those remaining are often pressed to pick up the slack. The resulting fatigue can lead to lower productivity, higher absenteeism, more turnover, increased medical costs, and more. Companies that are slow to address talent shortages increase their risk exposure and threaten their organizational resilience. Personnel gaps in critical business roles came in as third biggest issue stemming from the talent shortage, cited by 41% of respondents. Companies missing key people could face severe interruptions to their business in a crisis situation. Lack of talent resources can also compromise controls and risk processes (cited by 39% of respondents). Another 29% said talent issues reduce their ability to identify and respond to risk events. Larger risk and compliance staffs, best-in-class technology, and a chief risk officer to act as risk champion can give you a needed boost to respond to threats, make decisions, limit disruptions, and maximize opportunities in this new generation of risk. Have you added that power to your playbook?

For a complete look at the survey findings, download The New Generation of Risk report, and check out Riskonnect’s risk management software solutions.