1. Crystalize risk management expectations
To propel the CRO, it is important to outline the board’s risk management expectations. The survey data outlines four key areas where there is significant opportunity for improvement, which require the following actions:
Take a holistic approach to risk management
Boards want a holistic approach to risk management that incorporates both emerging and traditional risks. However, just 39% of boards today believe their organization’s risk management capabilities are more than moderately effective at managing both atypical and emerging risks.
Identify opportunities in risk
Boards require executive management to better identify opportunities that lie in risk. For example, if a new competitor emerges and secures a new venture funding round, this development might be included as part of the wider reporting on competitive risk.
However, in this example, this business also presents an opportunity from the board’s perspective, as an acquisition target or a potential strategic partner. Therefore, boards must adequately challenge executives, including the CRO, to identify these “upside risks”, and consider how they might be reframed as opportunities.
Interlink risks with secondary impacts
Boards want CROs to better assist executive management in considering how risks are interlinked and identify potential second-order impacts. For example, climate change presents interconnected risks for businesses related to operations, supply chain, customer base displacement and reputation, assuming limited action.