The complex business world demands CROs who can make digitally-confident and data-driven decisions to support growth, increase business value and maintain stakeholder trust.
At the heart of these global risks is trust – trust in an organization’s ability to protect data and privacy, manage their supply chains and operate ethically. More and more organizations now understand that risk and trust are inextricably linked. In fact, loss of trust is arguably the biggest risk that a business can face since everything else depends on it.
Add to these risks the uncertainty of the global economy and 2019 is set to be a challenging year for risk professionals. With that in mind, I have five fast questions for CROs contemplating the year ahead:
- Do I have the right risk function? Forget the traditional risk management approach of updating a risk register every quarter. This analogue and after-the-fact approach is no longer adequate in a dynamic, digital world. It is imperative nowadays to bring risk professionals into the business decision-making process from the outset.
- Do I have the right people? Do your people understand the future direction of risk management and operate in real time? Do they have the digital skills necessary to steer decision-making? Fast-paced businesses of today need risk professionals sitting around the boardroom table with business leaders, informing them of the downside risk of business decisions, but also how to capture upside opportunities by taking calculated risks.
- Are we focused on the right risks? Many CROs fall into the trap of focusing exclusively on risk avoidance – and on managing the downside and outside risks outside an organization’s control. Forward-looking organizations are also focused on upside risk – the risk of missing out on a new business model or market opportunity. With the right risk lens, market disruption is possible – and profitable. Just ask the airlines moving into financial services, the property companies evolving into energy providers and the technology giants taking over city-building.
- Are we looking at the right risk role models? Don’t benchmark your risk function against the competitors in your own industry. Instead, compare yourself to best practice in adjacent industries. Can you learn from how the financial services sector harness both upside and downside risk, for example?
- Do I have the right infrastructure? Consider whether you have the right infrastructure – technology, data and systems – to tackle the privacy, compliance and third-party risks looming large on the horizon. Are you investing in the right technology to maintain trust? How are you automating data capture and analytics to make real-time decisions?
We’re witnessing a seismic shift in the way risk professionals operate. No longer are they hiding in the back room, emerging every quarter to complete a spreadsheet.
My call to arms is clear. We’re witnessing a seismic shift in the way risk professionals operate. No longer are they hiding in the back room, emerging every quarter to complete a spreadsheet. The complex business world demands flexible and forward-thinking people who can look at business decisions through a risk lens. And it demands CROs who can make digitally-confident and data-driven decisions to support growth, increase business value and maintain stakeholder trust.
The EY “Trust by Design” framework addresses clients’ growing demands for advice on how to manage risks and how trust can be embedded into their businesses in the digital era. To find out more, contact me.
Summary
The future is notoriously difficult to predict, as any chief risk officer (CRO) will attest. But there are several global risks that should be on every CRO’s radar this year. At the heart of these global risks is trust. More and more organizations now understand that risk and trust are inextricably linked. Add to these risks the uncertainty of the global economy and 2019 is set to be a challenging year for risk professionals. With that in mind, I have five fast questions for CROs contemplating the year ahead.
