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7 Skills for CRO Greatness

Must-have qualities for today’s corporate risk guru.

By Selena Chavis

Winter 2013/14

The initial shock of the economic crisis may have faded, but the aftereffects likely will continue well into the future. In fact, a 2012 survey by Deloitte and Forbes Insights, Aftershock: Adjusting to the new world of risk management, reveals that 91 percent of companies are reorganizing to make risk management strategies a higher priority. The study is based on insights from 192 U.S. executives within industries covering everything from consumer and industrial products to healthcare, technology and telecommunications.

It’s with little surprise, then, that industry professionals believe the role of the Corporate Risk Officer (CRO) will become increasingly important in the coming years as companies respond to the growing need for compliance and readiness strategies.

“It’s evolving into more of a C-suite role, and these professionals are getting a more proactive role at the table,” says Brian Schwartz, partner and lead for PricewaterhouseCoopers (PwC) risk and compliance across all sectors. “It’s become an elevated strategic element.”

Mike Assaad, regional vice president for Robert Half International in Chicago, says his recruiting firm has seen an uptick in requests for CRO professionals. “It’s still not a typical career trajectory, but it is becoming more prevalent,” he explains.

Risk as an area of focus and expertise, however, is a tricky thing. For one, the Deloitte/ Forbes Insights survey notes that 28 percent of respondents—the largest percentage over any other factor—feel that “people are unaware of what they need to do concerning risk.” Added to that, says Schwartz, risk management is in constant flux across industries. “It’s a relatively ever-changing role in terms of definition,” he notes. “A lot of companies go through a lot of CROs looking for the perfect fit.”

As companies continue to assess potential candidates, we weigh the must-have characteristics of effective CROs in today’s risk climate.

1. A CPA Skill Set

Peggy Hardek, PwC team leader in charge of risk assurance for the Chicago market, notes that 10 years ago it wasn’t uncommon for the CRO function to be given to general counsel for a company. As the risk management function has evolved, however, the pendulum has swung towards the CPA camp.

“A CPA background has become critical to this role,” she says, pointing to the need for experience in internal auditing, financial planning and analysis, and data analytics. Schwartz agrees, adding that, “Financial risk is at the base of all business processes. That makes the CPA skill set a natural fit.”

2. Strategic Vision

“You have to have someone with a big picture perspective,” says Schwartz. “CRO candidates are wise to get educated on broad operational processes and where they are headed from a strategic, operational and financial perspective. These professionals need to understand where a company has been, where it is going and how it will achieve its goals with minimal risk.”

A further Deloitte report, The Risk Intelligent Chief Compliance Officer, suggests that CROs need to align oversight efforts with both risk management and business goals. The report notes that “as a senior executive with board-level visibility, the [CRO] can help the enterprise use its strengths in compliance to seek competitive advantage.”

3. Grace Under Pressure

A daunting regulatory landscape that only gets more complex each year alongside increased scrutiny from boards and stakeholders equates to high-pressure environments for corporate risk officers.

“The pressure is evolving daily from a regulatory standpoint,” says Schwartz. “Boards want more formal assurance from corporate risk officers. These professionals can find themselves bombarded with requests.”

And often what the corporate risk officer has to say isn’t what others want to hear. These professionals have to come into their roles expecting to be unpopular. It’s the CRO’s job to provide critical analysis of data regardless of whether it aligns with the course management has planned for.

4. Agent for Change

Because CROs often play the role of unwelcome messenger, the ability to advance and influence change is critical to their skill set. This requires creativity, says Assaad, who points out that not all analytical, numbersoriented accounting professionals have the leadership skills needed to deliver in this area. It may require a certain charm and charisma to draw people in.

“The ability to build collaboration between groups is critical,” says Hardek, “as is the need for tact and diplomacy. You have to think around the whole circle of an organization. If there is a risk officer who is too black and white in their thinking, the potential exists for them to be ineffective.”

5. Deep Industry Knowledge

No two industries are alike when it comes to risk. This reality can make moving from industry to industry difficult for CROs. “They have to really understand what the risks are coming into the role,” Assaad explains. “Having that familiarity with the industry is very advantageous in this role.”

Assad also notes that the CRO needs a clear understanding of the organization’s structure, the key players involved in decision- making, and what opportunities and potential pitfalls may lie ahead. The best equipped CROs keep themselves engaged in the frontlines of a business or surround themselves with experts to fill in the gaps.

6. Excellent Communications

Excellent written, interpersonal and verbal communications are obvious needs for CROs who will have to interact with a wide range of stakeholders as well as be prepared to answer a flood of questions on a moment’s notice. From reports and presentations for board members to educating the frontlines about risk, CROs have to be able to relay information clearly, concisely and intelligently to all levels of an organization.

7. An Ethics Focus

High ethical standards are key to this position, since CROs often have to act as a company’s moral compass. In fact, the title used for this position in some companies is Chief Ethics Officer. Keeping a company’s reputation and integrity in tact should be at the forefront of responsibilities.

On the CRO Track

Professionals agree that early exposure to the internal auditing function through a public accounting position or work in a government agency like the FDIC is prime training ground for CRO hopefuls. From there, Assaad suggests identifying industries that are highly regulated and pursuing positions with companies that are representative of those industries.

He cautions, however, that the position is fairly niche and may limit a CPA’s next move. “Once you go into a CRO role, it might be difficult to make the jump back out,” he says. “It’s a very different skill set you will be developing.”

While the playing field is growing for those wanting to become a CRO, Schwartz emphasizes that professionals will have to remain flexible and open to learn. “This is still an evolving role,” he says. “You have to continually learn and adjust. You have to stay on your toes.”

 

 


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