Ensuring an Effective CEO-Risk Manager Partnership

Bob Dowd

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September 23, 2021

Two hands approaching a handshake, with images of business icons (locks, mail, computer, globe) overlaying them.

It should come as no surprise that CEOs face competing priorities and tough decisions, including navigating the constantly changing path towards growth, racing to stay ahead of the competition, attracting and retaining talent, and delivering value to stakeholders. However, risk management stands out as a top-of-mind concern for CEOs, whether cyber, transactional, regulatory, or internal controls.

According to Deloitte’s Global Risk Management Survey, 62% of CEOs are not “highly engaged” in addressing risk. This paints a grim picture for leadership teams, but can, and should be addressed. As regulatory environments continue to escalate in complexity, and boards take a more serious stance on risk, CEOs are more prepared to understand and proactively communicate about risk management. With the right risk professional, CEOs can set their companies up for sustained growth while mitigating risk.

CEOs can trust and rely on a good risk manager to ensure the business is running smoothly, but there is often a natural split between the two roles due to differences in mindsets. CEOs have a lot to focus on aside from the intricacies of risk and compliance and are more concentrated on delivering growth and value to shareholders, which can be seen as a cross purpose with risk management.

The Risk Manager’s Role in Supporting the CEO

This key relationship requires a high level of trust, mutual understanding, and constant open communication, enabling both roles to be most effective at their primary strengths. CEOs should not run too far ahead with too many initiatives that make operations more vulnerable to risk. Alternatively, the risk manager should not stifle innovation efforts by being too heavy-handed with focus and control.

A CEO approaches business as an explorer, with an outward emphasis on pioneering and pushing the business forward, while the risk manager is more of a preserver, oriented inward toward organizational focus, control, and stability. Businesses require ambidexterity to embrace both mindsets simultaneously to fuel innovation, not just in-house but also for the clients and other stakeholders.

A balance can be achieved if the two parties discuss and agree on three key items:

  1. A unified view of the organization’s vision, mission, and values
  2. Understanding of each other’s roles and how they need to support each other
  3. Regular communication to avoid hiccups

The qualities that a CEO looks for in a strong risk manager include:

A drive for data and actionable metrics: Business requires a leader who can provide statistical insight and business intelligence to advise the CEO on the data and how to move forward with a risk management strategy.

Stays ahead of technological trends: Organizations that proactively construct advanced risk management capabilities to keep pace with transformative change can gain significant competitive advantages. With new technologies and tools emerging every day, staying on top of the latest trends is critical for effective risk management.

Symbiotic outlook: CEOs and risk managers should work towards establishing trust and mutual understanding. When this alliance works effectively, it can allows creative space for innovation backed by reliable and safe business operations.

Effective reporting to CEOs: In some cases, organizations do not have a proper system for reporting. Some use spreadsheets, some have a risk register, while others use email to notify the appropriate internal stakeholder. Often these reports are not captured in one place for the CEO to consult later. Risk managers should know how to leverage automation technology to remove menial tasks and focus more time on analysis and prevention. There are business intelligence tools that can help risk managers capture, assemble, and translate complex global payment data in one easy-to-read report, which they can present to higher management. Using digital solutions as a forward-thinking and innovative risk manager can make for a more efficient and transparent workplace. 

The ability to think ahead and effectively pivot: The pandemic showed why a flexible and forward-thinking risk manager is important, specifically in areas like foreign exchange, retail and healthcare. A good risk manager should know whether the company is prepared in the event of a major business disruption and what kind of tools and technology the company should adopt to stay safe.

Bob Dowd is chief executive officer of moneycorp Americas.