Much has changed since the worldwide economic slowdown grabbed hold in 2008. Within global financial organizations, there is a new, heightened sensitivity towards risk and volatility, which has elevated the importance of the chief risk officer (CRO) and the chief financial officer (CFO). The role of each has begun to change, according to a study by Accenture.
“Rethinking Risk in Financial Institutions: Making the CFO-CRO Partnership Work” states that the CFO-CRO partnership is in transition and faces considerable uncertainty. The reason for this uncertainty is thought to be the reduced profitability for some financial businesses, which, in many instances, leads to restructuring of how these functions are carried out.
Another element of uncertainty is regulatory change. “While general themes are clear—holistic reporting, use of risk-adjusted capital markets and the independent authority of the risk function—many specifics of implementation and enforcement remain untested,” according to the report.
Moreover, it states that though healthy debate between the CRO and CFO is important, companies need to be mindful of the possibility of creating an adversarial relationship between the CRO and CFO, something that some organizations are undoubtedly already experiencing.
The CFO/CRO Relationship
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