Opinion: “I challenge risk managers to volunteer to become a member of the board”

Although I have been a passionate risk manager for some years now, I am still on a journey to create an outstanding risk culture in my company. This is a long-term task and requires dedication by senior management, focus by the board and of course, my patience.

Now and again I find myself wondering about how it would be if we, as risk managers, were given a higher priority in the organisations we work for than is the case for many of us today – the role of a chief risk officer (CRO) reporting directly to the chief executive and members of senior management.

If this was a possibility in many more organisations, would risk managers come closer to the goal of creating an outstanding risk culture than where most of us are now? Would it create a significant positive difference to our company’s financial status? Would our company have a stronger brand both internally and externally? Or am I simply attaching too much importance to the value of risk management? I am convinced that the answer to the latter is no but to the rest of the questions, the answer is yes.

Risk management is important in ensuring sound continuation and development of our business. By having a dedicated risk specialist, such as a CRO on the board, risk management policies and processes can be implemented faster and more importantly, the CRO will be in a position to add value by considering the synergy between risk management, business opportunities and strategy more easily because they will be involved in advising on these strategic decisions.

However, it is not written in the stars that chief executives will upgrade their senior management team with a CRO to provide greater focus on risk management. If however this was the case, and senior managers were given the powers and resources to appoint more CROs, there would be a better chance of raising the number of CROs at board level – be it in one’s own company or by providing more opportunities to hire CROs externally, depending on governance rules (some European countries will allow for external professionals to sit on their board of directors). Unfortunately, for the time being, having a CRO on the board is a dream yet to be satisfied for most of us.

So, we have to step up and push for change. Encourage and convince management that risk should be considered at top level, and this can be done by appointing more CROs.  An experienced CRO has solid knowledge of how the business works including, the day-to-day operation and where the key revenue streams are – and the risks that could affect these areas. Take supply chains as an example: CROs fully understand the impact a major disruption to the supply chain could have on production, the production’s impact on sales, the sales impact on financial stability, etc. The combination of risk management and business knowledge is a skill that can, and should be, attractive to the boards of directors. I would challenge management to appoint CROs and CROs to volunteer to become a member of board of directors. This will pave the way for greater focus on risk management by senior management on a broader scale.

Helle Friberg, FERMA board member and group risk & insurance manager at Hempel