As risk management moves into the front office, it is beginning to lose its defensive stance and look for ways to add value. It is now seen as providing the business with the safety net it needs to pursue innovative strategies with greater confidence.
Consequently, chief risk officers have grown in importance and influence. In the wake of the financial crisis, there are signs that they are aligning more closely with the CFO’s agenda, providing more consistency across finance and risk.
A common challenge is embedding the right kind of risk management culture in the organization. Clear and well-communicated guidelines and expectations from the top down are a key first step, paired with training.
Responsibilities and tasks need to be more stringently allocated, and compensation and reward systems must be aligned with risk and compliance rules.
As risk management grows in importance and the world becomes more complex, risk managers are demanding better risk analytics that will help them feed the business the information it needs. This need for better, faster information and insight is in turn driving investment.
All of the new demands being made of the risk function can only be met with the help of technology. As a result, new ideas, tools and capabilities have entered the market faster than ever before and the cost of keeping up with the technology, creates another challenge that will have to be overcome.