Slideshow It's Their Job to Worry: What Chief Risk Officers Really Think

Published
  • June 30 2015, 9:00pm EDT
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American Banker Research conducted a detailed online survey of 49 risk management executives from our readership as part of the inaugural C-Suite Series. The respondents included risk managers from banks with over $10 billion in assets all the way down to institutions with less than $100 million in assets. Questions covered topics from where risk officers devote the most attention to what roles they see themselves taking on next. The survey reveals executives' significant focus on regulatory risk and that boards are being responsive to concerns raised by chief risk officers. Here are highlights from the research.

Compliance Demands Pile Up

When risk managers were asked to rank how much time they allocate to various responsibilities, regulatory compliance drew the most attention. Respondents on average said compliance issues take up nearly a quarter of their time, followed by managing credit risk (18.4%) and managing operational risk (13.3%).

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CROs Have Diverse Backgrounds

There is no set path to take to becoming a risk management executive, as reflected in survey responses. Risk managers have come from the compliance office, accounting, retail banking jobs, regulatory agencies and other career backgrounds. The prior experience most often cited was auditing, with nearly 35% of respondents saying they had held auditing or accounting roles previously. It was followed by compliance (20.4%), retail banking (18.4%) and financial analysis.

Coping with Change

Over 59% of respondents said keeping up with regulations was among the top challenges to their role as risk management executive. But not too far behind was "managing change," at 46.9%. They were followed by "adapting to changing business requirements" and "keeping up with technology."

Your Board Is Listening

Boards appear to be much more sensitive to risk-related issues following the crisis, and in some cases regulators require chief risk officers to have a direct reporting line to the board. Of survey respondents, 26% said their boards were "highly responsive" to risk concerns. But there is still less responsiveness among business line managers.

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What's Next for Risk Managers?

Being a risk management officer is specialized, but it also is a highly visible role that can be a launching pad for other jobs. While over a quarter of respondents said they see their future role as remaining in risk management at their current institution, some also see their next role as becoming chief operating officer, or taking on risk management challenges at a larger bank, among others.

Risk Management Still Has Room to Improve

Survey participants cite industry progress in improving risk management processes. For example, over 20% said institutions' credit risk management has been "excellent" since the crisis, while over 30% said it has been "very good." But there is still room to improve. When they were asked in what risk management areas the industry is still lagging, nearly half included operational risk. (Respondents could choose more than one.)

At the Strategy Table

On top of helping institutions weather oncoming storms, chief risk officers and other risk managers have also become heavily involved in banks' growth strategies, making sure new products and business lines are in line with the risk appetite. When risk officers were asked to choose from several descriptions for their role, "strategic advisor" drew the most responses. It was followed by "problem solver."