3 minute read 18 Jun 2020
Businesswoman wokring at desk at home

COVID-19: How CROs can lead by building stakeholder trust

By

Tonny Dekker

EY Global Consulting Enterprise Risk Leader

Excited to serve as a Global Client Service Partner with over 25 years working to transform the businesses of our big Global Clients. Straight-talker with a big heart.

3 minute read 18 Jun 2020

CROs are being challenged to lead the organization by mitigating risks and thereby build stakeholder trust.

In brief
  • Reorient from risk to trust by developing trust journeys with stakeholder groups to identify and gauge both large and small risks.
  • Look beyond the organization’s boundaries to increase resiliency. Also keep an eye on megatrends, such as climate change, and their associated risks.
  • Use more data to inform risk intelligence. The wider the data sources, the more resilient the organization can become.

Several months into the pandemic, many Chief Risk Officers (CRO) are feeling cornered by accusations they should have seen such huge disruption coming and taken the necessary steps to prepare for it.

Stakeholders are now looking to CROs and the systems they manage to lead the organization by mitigating risks through the coming months. Organizations that can crack the code of regaining trust among their stakeholders will quickly adapt to the new normal they face.

The situation and expectation for CROs

While some have described the COVID-19 pandemic as a “black swan,” an unforeseeable event, it was in fact more of a “grey rhino” – moving slowly toward us, but inconvenient to face. This has led to CROs being posed with the question, “What are you going to do about it?”

In the coming months, all kinds of operations will be coming back online and businesses restarting as we emerge from lockdown. This is the critical moment when CROs should facilitate discussions with other leaders about the future of the business and operating model.

Six actions for CROs

1. Reinstate risk governance and internal controls

Prepare to weather the coming turbulence in recovery by ensuring that governance and controls are being adhered to. Controls may need to be updated to accommodate remote work and other wider changes to the supply chain, procurement, and how the organization services customers.

2. Reorient from risk to trust

Trust can be a better articulation of risk than risk itself. CROs should develop trust journeys for individual stakeholder groups – investors, regulators, employees, customers – and for individual issues, such as environmental impact, to identify and gauge risks both large and small.

3. Build contingency

Contingency planning will be a big part of the future for CROs, and scenario modeling everything from climate change and social unrest to cyber attacks and wars should be a key activity. Going one step further, resilience war games can test and hone the organization’s response to these situations, just like a fire drill.

Scenario modeling everything from climate change and social unrest to cyber attacks and wars should be a key activity. Resilience war games can test and hone the organization’s response to these situations, just like a fire drill.

4. Look beyond boundaries to increase resiliency

Look beyond the organization’s boundaries at the risks both faced and presented by third parties, customers, alliance partners and suppliers. This includes assessing potential reputational and ecosystem risks by association with any of these stakeholders. Also keep an eye on megatrends, such as climate change, and their associated risks.

5. Use more data to inform risk intelligence

Building enterprise resilience means relying more on data-driven intelligence in risk management. And the wider the data sources, the more resilient the organization can become. For the time being, data will come from the same places as before, but CROs should seek out more of it, gather it in real-time, and process it to enable better analytics and AI. In the future, CROs will increasingly be seeking data from other companies in the same sector to analyze what is going on in their world.

6. Think longer-term

Those in risk functions were, for many years, treated just as compliance people. But now CROs are being challenged to break out and look at future trends to identify upside risks as well as outside risks in order to discover their long-term value perspectives. CROs must consider their organization’s meaning and purpose, and the value it brings to people and the planet as part of truly holistic and strategic risk and trust assessments.

Summary

In the coming months, all kinds of operations will be coming back online and businesses restarting as we emerge from lockdown. This is the critical moment when CROs should facilitate discussions with other leaders about the future of the business and operating model. The article suggests some recommended actions to help CROs.

About this article

By

Tonny Dekker

EY Global Consulting Enterprise Risk Leader

Excited to serve as a Global Client Service Partner with over 25 years working to transform the businesses of our big Global Clients. Straight-talker with a big heart.