Viewed in Heidrick & Struggles
The financial services industry is facing an evolving landscape of risks, and attracting and retaining the next generation of risk leaders is crucial.
Evolving risk landscape
The role of Chief Risk Officers (CROs) has become increasingly complex, demanding expertise in traditional risk types, strategic acumen, knowledge of emerging risks, and digital dexterity.
The scope of risks has expanded to encompass environmental, social, and governance (ESG) issues, climate change, political instability, cyber threats, and pandemic-driven changes in employee preferences.
Surging demand
The demand for risk leaders has surged across in many industries, but the financial services sector is grappling with talent shortages. The aging workforce is a significant concern as many experienced risk leaders are retiring, leading to a loss of institutional knowledge.
Remote and hybrid working have expanded talent pools but also introduced challenges in onboarding and maintaining a consistent corporate culture. Balancing remote and in-office work is a priority for financial services firms to attract and retain strong risk leadership.
Skills
Capabilities required for modern risk leaders include agility, business acumen, communication skills, curiosity, digital dexterity, experience in both financial and non-financial risks, influencing, and relationship building.
Digital dexterity is crucial due to the continuous threat of cyber and technology risks. Risk leaders should also focus on data risks and data governance.
Succession
To develop future risk leaders, financial firms should consider rotating potential leaders through frontline business roles to build broad experience. However, challenges related to compensation, staffing, role structure, and function structure may arise.
Building the risk leadership bench include reconsidering mobility in hiring and succession planning, standardizing hybrid and remote working practices, and hiring people with diverse backgrounds, including first-line control functions, operations, and technology.
Take-aways
Financial services firms must act now to ensure they have the right risk leaders for the future, requiring a flexible mindset for succession planning and ongoing cross-training initiatives while emphasizing the value of the risk function.
The evolving risk landscape demands leaders with a diverse skill set and a proactive approach to risk management.
