The Changing Face of Risk and the New Role of Risk Compliance Officers

Recent changes in the global financial landscape and accompanying problems during the 2008 crisis is promoting both public and private firms to seek active guidance from risk compliance officers. In the wake of 2008 aftermath, many Fortune 500 firms are reassessing risk by establishing new titles such as Chief Risk Officer, CRO.

In fact, CRO is a relatively new title that is quickly transforming into a trend in the financial sector. As such, the role of CRO goes beyond the fundamental duties of risk compliance officer. Whereas, risk compliance officers are trained to ensure compliance of rules pertaining to risk situations, the role of CRO differs in the sense that it requires active leadership role. Therefore, numerous new positions at large financial firms are created to highlight the importance of risk management in the 21st century. As of now, the title of CRO was mostly limited to financial institutions, but the growing trend may force other sectors to push for the introduction of the new title. In addition to new duties, CRO also work with compliance officers to manage various types of risks such as credit risk, market risk and operational risk.

The title requires leaders to anticipate possible disruptions and influence decision-making process in the organisation. By providing an independent view of ongoing risks, the role of CRO is that of a strategic thinker who must act proactively to change and implement new rules of risk compliance, where appropriate. In fact, CRO acts as a bridge between middle management and the board of directors. According to Deloitte’s Global Risk Management Survey, almost 68 percent of CRO report directly to the CEO of a firm followed by 46 percent who are responsible for reporting to the Board of Directors. Such effective coordination means that CROs are taking a lead role in establishing authority in various financial firms as they are able to make critical risk-deterring decisions without complex hierarchical chains.

Nowadays, many companies are promoting their chief compliance officers to take on duties of CRO. To improve the integrity among financial institutions, firms such as Hall Capital Partners LLC, are recruiting highly reputable and experienced individuals who have the required skills to act in the important leadership roles. Accordingly, Helane L. Morrison is assigned the job of Chief Compliance Officer of the company. Previously, Ms. Morrison worked in leadership roles with SEC exposing mega scandals across the financial institutions of the United States. As a Managing Director and General Counsel, she will oversee and craft important risk management strategies for the investment firm.