City firms see new look CROs as drivers of growth, research suggests

Chief risk officers are key partners in driving growth and their role has evolved since the 2008 global financial crisis, research led by Dr Cormac Bryce from Bayes Business School suggests

Chief risk officers in UK financial services firms are evolving from compliance-focused enforcers to key strategic partners in the boardroom, a report published today reveals.

As financial institutions navigate an increasingly complex global landscape, the report, drawing on interviews with 31 chief risk officers (CROs) in UK-based firms, reveals the dual mandate of the role: protecting organisations from threats while unlocking value through calculated risk-taking.

The research was undertaken by academics from Bayes Business School (City St George’s, University of London) with support from the Lord Mayor, Alderman Alastair King DL, as part of the ‘Growth Unleashed’ agenda he champions.

Once seen as the ‘no team’ enforcing strict compliance, the report says, CROs are now recognised for their ability to guide organisations through complex risk landscapes while fostering innovation, creating value and driving growth.

The global financial crisis of 2008 and the introduction of the Senior Managers and Certification Regime in 2016 were milestones in that evolution, the report concludes. Of the new breed of CROs, the most effective are those who collaborate at board level – even if at times their role can require independence of thought, it adds.

Lead author Dr Cormac Bryce, Reader in Risk Management at Bayes, said: “The striking message that emerged time and time again in our discussions with CROs was the sheer range of skills needed to undertake the role. That is because senior colleagues increasingly recognise that effective risk management can foster growth rather than inhibit it.”

Strategic thinkers

The report, Optimising Growth: The Evolving Role of the Chief Risk Officer, recommends financial services firms should:

  • Invest in risk management functions that are deeply integrated with business strategies
  • Cultivate CROs with broad skill sets – including leadership, technical expertise and business acumen
  • Foster collaborative relationships between CROs, CEOs and business units to maximise organisational resilience and growth.

Noting that ministers have recently told regulators to review their regulatory activities and processes to drive growth, Dr Bryce said: “The global financial crisis is rightly seared into the soul of the sector. In many ways it ushered in the era of the board level CRO.

“It was clear from our interviews with CROs that compliance post-crisis had reasserted the importance of prudential decision making, which at times led to conservative outcomes in terms of growth. Politicians, regulators and sector leaders are now reconsidering the role of regulation in the search for economic growth. This will be a delicate balancing act, but one to which CROs are expertly attuned,” he continued.

The Lord Mayor of the City of London, Alastair King, said:

“The strategic management of risk is perhaps the defining capability that will separate leading financial centres from their competitors. This research offers invaluable insights for developing the next generation of risk leaders.

“We need to reform their attitude to risk and rethink our mindset. To sustain the success of the UK's world-leading financial services sector, firms need to innovate and take responsible risks – and they must be allowed to do so. This much needed shift will allow us to unlock growth across Britain.

“Regulators will increasingly need to focus not just on preventing failure, but actively encouraging success.”

The report was published as the Lord Mayor was installed as the Rector of City St George’s and Dr Bryce was appointed as the Lord Mayor’s fellow for this term.

The rise of the polymath CRO

Modern CROs see themselves as filling diverse roles, including:

  • Designing and implementing robust risk frameworks
  • Managing crises while preventing future risks
  • Orchestrating cross-functional risk management initiatives
  • Contributing as an equal partner at the highest levels of decision-making, ensuring risk considerations align with long-term strategic objectives
  • Embedding a mature risk function and developing strong CEO relationships and broad business acumen.

One of the interviewees, City risk practitioner and author Jennifer Geary, said: “This report shows us that CROs are ready, willing and able to deploy their skills in service of responsible growth. Leaders should not neglect this highly-skilled resource to boost informed risk taking.”

Dr Sionade Robinson, Vice-President of Enterprise, Engagement & Employability at Bayes Business School, added: “This report exemplifies how research at the intersection of academia and industry can drive meaningful change, supporting the City of London’s position as a global financial leader.”

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