Chief Risk Officer is the term for a position in the top management level of a company. The CRO is responsible for the company-wide risk management and leads the ERM (Enterprise Risk Management). As part of this management, risks from all different areas are considered for a company. These include, for example, technological, operational, economic, and regulatory risks.
What is a CRO (Chief Risk Officer)?
CRO is the acronym for chief risk officer. Alternative terms for CRO are chief risk management officer (CRMO) or risk management officer (RMO). It is a position in the company that is located at the top management level. As a rule, the CRO is a direct member of the executive board or management. The Chief Risk Officer is responsible for enterprise-wide risk management. He is in charge of the ERM (Enterprise Risk Management).
The most important tasks of the Chief Risk Officer are the identification, assessment, and minimization of all possible risks. Regular risk reporting also falls within his remit. Risks to a company from a wide range of areas, such as technological, operational, economic, or regulatory risks, are considered.
Among other things, the Chief Risk Officer ensures compliance with legal requirements such as those of the Sarbanes-Oxley Act. IT risks also fall within the remit of a CRO. A Chief Risk Officer requires a high level of professional and social competence.
Many years of professional experience in the risk management environment are required. Due to constant technological and economic changes, the areas of responsibility and the way of working are continuously evolving. In most large companies, the role of Chief Risk Officer is filled. The position is especially essential for companies that are responsible for critical infrastructure.
Tasks of a Chief Risk Officer
The central task of the chief risk officer is enterprise-wide risk management. In this role, the CRO leads a company’s ERM programs to identify, measure, assess and minimize risks. Many different categories of risk fall within his or her scope of responsibilities. These depend in part on the industry in which the company operates.
Depending on the industry, individual risk categories, such as regulatory risks or technological risks, for example through the use of information technologies, may dominate. Chief risk officers take care of insurable risks and deal with risks of legal requirements. Software applications and business intelligence tools support the work of the chief risk officer and the control of risk management.
Requirements for a Chief Risk Officer
The requirements for a Chief Risk Officer vary depending on the company and the industry. The general requirement for working as a CRO is many years of professional experience (ten years or more). Most CROs hold a university degree and have deep expertise in law and finance.
They have mastered the methodology of risk management and know the complete value chain of the company. The social skills of a Chief Risk Officer include strategic thinking and action, methodical work, assertiveness, persuasiveness, leadership, and communication and presentation skills.
