There is a danger that if the role is too narrowly focused in this area then firms will miss out on the wider, more strategic risk leadership that a great CRO can provide. The report also suggests that there will be a continuing industry shortage of people able to carry out the role unless firms actively consider what they need from their CRO, then develop individuals with the right mix of technical risk competence and business leadership skills, and offer them clear career paths.
Worth a seat at the table? Redefining the role of the insurance CRO was produced by a work stream of industry practitioners - Martyn Rodden, MIRM, Director and CRO at MS Amlin Underwriting Limited, Justin Elks, Director at BaxterBruce (now part of Crowe Horwath) and Darren Munday, Associate at BaxterBruce (now part of Crowe Horwath).
Justin Elks explained: "There is no such thing as a single perfect CRO for all businesses at all times. In this report we have developed a model that helps firms consider what they need in the context of their own lifecycle, business model, culture and leadership style. We believe the fundamental objective for all CROs must be to help their firms create, capture and preserve value.
This means that risk and opportunity must be properly considered at a strategic as well as at an operational level and CROs will need the skills and capability to help their firms do this. We argue that what was right for firms a few years ago might not be right now and we have identified four key shifts in approach that we think firms, and risk professionals, need to think about:
• from using risk models for regulatory compliance to gaining greater return on investment by using them to widely support business decisions and to improve the efficiency of supporting processes around risk models
• from a focus on operational risk controls to providing effective and efficient risk management across the organisation to support operational efficiency
• from a regulatory compliance mind-set to a customer focus mind-set
• from implementing process to consider risk in strategy and plans to a wider strategic influence within the business, including acting as an enabler and shaper of innovation
All of these have implications for the skill sets that future CROs will need. "
Martyn Rodden added: "The demands of implementing Solvency II over the past few years have meant that most insurance CROs have been sharply focused on ensuring timely compliance with regulation, including mastery of internal models. But the world is changing and boards will be looking to their most senior risk expert to lead the risk debate, support decision making and add value in new ways. The CRO role is still maturing and it is vital that boards think through their needs in the context of the rapidly changing insurance and governance environment. CROs also need to be able to articulate the value coming from their work and that of their teams, in ways that engage and inform the wider business."
IRM Chairman and IMIF founder José Morago said: “IRM has been pleased to support this important piece of work which has highlighted the changing demands on the risk function, and particularly the CRO, in insurance companies. There is great opportunity for talented CROs and other senior risk professionals to add real value to their organisations at a strategic level. This will require risk professionals to broaden their leadership skills, qualifications and mind-set. The IRM is well placed to help risk professionals on this journey.”
|
