The rapid changes and intricacy of today’s business environment call for a stronger risk management function. As such, many organizations are currently hiring Chief Risk Officers (CROs) to overcome the risks.
Entrepreneurs have long been concerned with risks that can threaten profitability and productivity. Fortunately, the formalization of those efforts in recent decades in ERM (enterprise risk management) and concerns fueled by legislations like the Dodd-Frank Wall Street Reform made the Chief Risk Officer position even more vital in the C-level hierarchy.
If you see yourself in a risk management officer role, there are many steps you’ll first need to take. From getting the right qualifications to learning transferable skills, here’s everything you need to know about a chief risk officer and how to become one.
What Exactly Does a Chief Risk Officer Do?
Also known as a risk management officer, a chief risk officer is basically tasked with various responsibilities like analysis and mitigation of business risks that could hamper an organization’s progress. As a chief risk officer, your day-to-day risk management duties include planning to proactively manage business risks with the change in your organization’s operating environment. This will sometimes involve modifying business procedures and policies to address vulnerabilities.
The primary role of a CRO is indeed quite hectic and varied as well. Based on your organization, this role can differ, and so the potential business risks change.
Generally, the main types of risks a risk management officer mitigate include:
- Regulatory risks: CROs ensure that their organizations comply with all the laws, rules, and regulations concerning their industry.
- Technical risks: Risk management officers ensure that their companies are protected from technical business risks like cyber-attacks which can reveal sensitive information.
- Competitive risks: Chief Risk officers mitigate any business risks presented by competition to ensure that their organization’s brand remains positive in the industry.
Risk has generally become part and parcel of business during technological evolution. As such, CROs need to come up with relevant procedures to handle and mitigate them. They’re currently more concerned with risk assurance, data protection, and eradicating system vulnerability.
Overall, your roles and responsibilities as a risk management officer will depend on your company’s size and the industry you’re working.
What Kind of Training Does a CRO Need?
To become a risk management officer, you need to start your career by earning a minimum college degree in economics, statistics, finance, business administration, accounting, or a related subject. Coursework in pertinent subjects, must also be part of this program, which includes corporate compliance methods, risk evaluation, auditing, emergency protocols, and fraud prevention strategies. This is crucial for understanding primary financial models, such as economic capital and other traditional concepts.
Becoming a risk management officer isn’t an easy road because you should build up a career path that will be preferred to other competition in the market. For instance, before applying, you should gain extensive work experience of about 20 years in the same industry. Consider starting early by taking part in consulting opportunities and internships, which will help you learn more about finance tasks first-hand. This will also help you gain applied experience. Obtaining licenses and certifications, such as the CRMA (Certification in Risk Management Assurance), is usually beneficial in bagging promising roles.
What Skills Does a CRO Need?
To successfully identify risks, assess them, and develop strategies that will minimize these risks to acceptable levels, you must have the following skills:
- Presentation skills: Risk management officers should create and make presentations for their organizations’ executives and shareholders, making presentation and public speaking skills an asset in this role.
- Problem-solving skills: These skills can help you find viable fixes to manage a business’s risk.
- Strong quantitative and analytical skills: These will help you run all the necessary calculations.
Aside from the skills mentioned above, it’s also wise for CROs to have adequate knowledge of their company’s technology, networks, and systems.
Are There a Lot of Jobs as a CRO?
With the rapid rise in tech organizations, the demand for risk management officers is also increasing. And as a result, both non-financial and financial firms see a rapid increase in the hiring of Chief Risk Officers with strict compliance and regulation procedures.
Some of the main employees of CROs include health care, the financial industry, technology, and insurance firms. When it comes to salary insights, the average salary of a risk management officer in the U.S. is about $131,471 per year. The salary range normally falls between $40,000 to $254,000. This means that with ample preparation for becoming a CRO, you can rest assured of having a rewarding and profitable career.
Remember, becoming a chief risk officer won’t happen overnight. There are many steps you need to take to help get you into this lucrative field. However, if you’re passionate enough about risk management and you’re ready to make a difference, you won’t have any problem following the steps mentioned above.