While a vast majority of financial firms plan to rethink their approach to risk management, significant changes are already occurring at many organizations. Risk, increasingly, has gained a seat at the table in top-level decisions, and regulatory demands, including the Own Risk and Solvency Assessment (ORSA) and Solvency II, are bringing risk and finance closer together.
Risk is increasing in authority and reporting independence
Accenture’s research on 17 leading financial institutions worldwide and more than 1,400 respondents reveals some key findings on the role of risk:
- The CRO role is gaining momentum. In fact, 81 percent of companies surveyed have a CRO and more than 85 percent say that the risk manager at their firm has a direct reporting line to the CEO.
- Since the CFO and CRO can have different roles and agendas, it is important to keep those differing roles and maintain their independence. The differing views of the CFO and CRO allow the CEO to have access to the best information.
- With risk-adjusted capital models at the heart of solvency initiatives, operational integration has made the CFO-CRO partnership a delicate balancing act.
While the risk function is gaining in authority and responsibility, regulatory demands are driving closer operational integration between risk and finance. It’s now increasingly important for CFOs and CROs to collaborate effectively, and next week, I’ll explore how some firms are enhancing this critical partnership.
To learn more download Rethinking Risk in Financial Institutions: Making the CFO-CRO Partnership Work (PDF; opens in a new window).
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