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.