Chief Risk Officers

Companies are finding it increasingly burdensome to comply with all pervasive compliance as they are required to monitor operating risks. The Chief Risk Officers (CROs) are symptomatic of the transition towards enterprise risk management systems and increasingly strategic perspectives towards regulatory compliance. According to a survey conducted by the Economist Intelligence Unit, 45 per cent of the companies interviewed had already appointed a CRO or equivalent predominantly in the financial services sector. In other industries, one in four companies is planning to appoint CROs. The Chief Risk Officer has become the point person to take the onus for all the compliance with the regulations of Sarbanes Oxley.

The Chief Risk Officers are taking on the all important role of managing enterprise wide risks. In a survey of the insurance industry, it was found that 39% of the respondents noted that chief risk officers have the primary responsibility for risk management-up from 19% in 2002. And 40% of chief risk officers now report to the CEO-an increase from 26% in 2002.

The growing importance of the Chief Risk Officers reflects the need for a new breed of finance employees with a forte in strategic finance planning. According to a survey reported by the CFO magazine, 79 percent of the respondents chose "strategic financial thinking" as one of the top three qualities they would value in a new CFO. This contrasts with the qualities in a traditional finance executive such as "champion of financial transparency" (36 percent), "zero tolerance toward accounting errors and fraud" (34 percent), and "operational experience running parts of the business" (30 percent).

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