In this post, we’ll explore the position of the chief risk officer (CRO) in detail – what CROs do, the requirements for becoming a CRO, salary ranges, and more.
This executive position is an important one in the modern enterprise, especially in today’s volatile economic environment. Managing risk in such uncertain times, after all, will become essential for surviving and thriving in the years ahead.
The Chief Risk Officer (CRO): A Job Profile and FAQ
Let’s cover the basics by answering a few of the most commonly asked questions about this role.
What does a CRO do?
A chief risk officer (CRO) – also known as a chief risk management officer (CRMO) – is a C-level business executive who is responsible for:
- Identifying, assessing, and analyzing risks that could potentially threaten a business
- Developing and overseeing risk mitigation plans
- Ensuring the organization maintains regulatory compliance
- Designing and maintaining efforts to mitigate losses
There is a wide range of potential risks that can threaten a business, and CROs must account for and develop mitigation strategies for all of these.
What types of risks do CROs plan for?
Here are just a few of many examples of the risks faced by modern businesses:
- Data breaches and cyber attacks
- Failure to comply with government regulations
- Workplace accidents
- Digital disruption
- Natural disasters
- Competition and marketplace uncertainty
The type of risk mitigation effort will depend on many factors, such as the risk in question, the business, local laws, and the potential business impact.
What types of solutions do CROs implement?
There are several strategies for risk management and mitigation.
When designing a risk mitigation plan, CROs will assess risks, analyze business impacts, and develop and implement a strategy for minimizing that risk.
Here are a few examples of how businesses can plan for and reduce risks:
- Business continuity plans, implemented in the event of a business disruption, are designed to maintain and restore critical business functions
- Emergency response plans are designed to save human life and reduce damage to a business in the event of an emergency, such as a natural disaster
- Workplace protocols and procedural guidelines can reduce the risks of workplace accidents, while also improving employee productivity
- Policies can be used to minimize risks associated with compliance and privacy
Also, in today’s enterprise, the adoption of new workplace technologies also introduces new risks.
These added dimensions require that CROs work closely with other departments, such as IT, to understand and minimize those risks.
What are the job requirements for being a CRO?
The requirements for becoming a CRO differ from organization to organization. Larger organizations have more requirements.
For the most part though, CROs need:
- A degree from a university in a relevant field, such as business or finance
- Years of experience working in risk management
- Extensive familiarity with the specific industry in question
- Knowledge of regulations and laws of that industry
- Strong people skills, management skills, and leadership skills
This role carries a high level of responsibility, so it is a good fit for those willing to take on a leadership position.
How much do CROs make?
Salary estimates for CROs vary widely from source to source. Factors that influence these estimates can include the company analyzing salary data, the industry, the size of the organization, and the company doing the hiring.
Here are a few examples of average annual salary estimates:
- $259,200 (Salary.com)
- $197,659 (Glassdoor)
- $155,351 (PayScale)
- $151, 755 (ZipRecruiter)
Despite the discrepancy among these figures, it is clear that, as with most other executive roles, the CRO position can be quite lucrative.
What is the future outlook for CROs?
In 2020, organizations around the world realized firsthand the importance of risk assessment and management. Those that had proper risk mitigation strategies in place, for instance, were most likely more prepared for crises such as the COVID-19 pandemic.
At the very least, the pandemic highlighted the importance of having a robust risk management strategy. Wells Fargo, for instance, added six new risk leaders in the second half of 2020.
While the greatest threats associated with the COVID-19 pandemic may have passed, many research firms predict that the post-COVID era – the “next normal” as McKinsey calls it – will remain uncertain and volatile for some time.
Forward-thinking businesses, therefore, will undoubtedly invest heavily in risk management and, as a consequence, CROs.
Should I become a CRO?
When evaluating the CRO position, it is important to focus first and foremost on job-personality fit.
This job would be a good fit for those who:
- Have analytical minds and like the risk management profession
- Will commit to deeply studying a variety of areas associated with risk management, such as corporate law, insurance, and information security
- Enjoy taking on high levels of responsibility
- Are willing to manage others
- Can cope with stress
Risk management leaders, as we saw above, need to put in a substantial amount of time and effort to become CROs, so it is most suitable for those who have a deep interest in and a dedication to this field.