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7 risks that will keep CROs awake in 2022

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We asked CROs at RiskMinds International and RiskMinds Insurance: What keeps you awake at night?

When the world changes, so does risk. In the past years, agility – the ability to respond quickly and adapt to a new environment, whether that’s economic, geopolitical, or social, – has become a skill that risk managers needed in order to survive the onslaught of regulatory, technological, and market developments. And today, agility is still necessary in order to navigate the new challenges that this decade brought to the forefront. To find out what those challenges are exactly, we reached out to CROs around the world and across industries and asked: What keeps you awake at night?

  1. Climate change and related risks, like climate transition
  2. Digital transformation, e.g. AI & machine learning adoption and improving services
  3. Cyber risks, including cybersecurity, cyber attacks, and criminal activities
  4. Economic developments like market movements, uneven recovery, volatility, and inflation
  5. Difficult to predict customer behaviour, habits, and expectations
  6. Getting risk culture and organisational culture right, including managing conduct risk and reputational risk
  7. Social and cultural divisions impacting operations and the business environment

James Turner, Group Chief Risk and Compliance Officer, Prudential plc

Blurring of the boundaries between work and home time. As CRO of a business focused on Asia and Africa, the social impacts of the uneven recovery across emerging markets to the pandemic and climate transition risks are top of mind. Similarly, the industry has not yet fully addressed financial and health inclusion, this will require significant digitalisation and result in new AI, cyber, privacy and conduct risks. Finally, I do not believe inflation is transitory, I fear a growing lack of confidence in the ability of central banks to tame inflation, an upward spiral of expectations and an inevitable sharper correction.

Ebbe Negenman, Chief Risk Officer, Knab

I believe that the bank benefits from a fit and well-equipped CRO. A good sleep is necessary, and nothing should keep you awake. But of course, the world around us has become riskier on a wide range of topics. Markets that show large price movements, consumer behaviour that is difficult to predict, and of course the broad impact of climate risk are the topics that keep us busy during the working days. But these growing risks have a positive impact on me: the job of CRO has never been more rewarding.

Thabile Nyaba, Chief Risk Officer, Old Mutual Insure

It is the uncertainty, complexity, volatility, and rapidly changing environment that is here to stay and not knowing what, when, and where the next disruption is coming from. This includes the level of preparedness by organisations while fielding all the risks that are rapidly coming from all angles, both internally and externally, not to mention the next anticipated major disruption which is expected to be a cyber-attack. How do we strike a balance between launching organisations into the future while navigating through the minefields of crises / risks and executing our strategy?

Dzhangir Dzhangirov, Senior Vice-President, Group Chief Risk Officer, Sberbank

In spite of all the advances made in the past, there are several overhanging issues that represent a threat for which there are no cures at the moment. Biggest of all is climate change – required international coordination is in many ways too complicated, while other solutions are local and as such are not sufficient. Second is cybersecurity – although it’s been addressed for more than 20 years already, it still represents a growing problem for the world. Local threats are more familiar – global low interest rate regime has created imbalances that can explode if left unmanaged. And last but not least – conduct risk: social demand for upgraded understanding of fairness requires rethinking of the ways in which we do business.

Deirdre Hannigan, Group Chief Risk Officer, AIB

The increased speed that new risks can emerge and crystallise. We are now managing risks in an environment reshaped by Covid-19, the increased acceleration of digital technology along with changes to customers’ habits can open up areas of vulnerability. For example, we’re seeing this through the increased sophistication of cyber criminals, opportunities to obtain sensitive data, damage systems or commit fraud, are growing at pace. We are also seeing new reputational risks emerge as expectations on banks change. Developing and maintaining agile, but robust, risk management oversight is more important than ever.

Sajid Iqbal, Deputy CRO, Habib Bank AG Zurich

If I have to pick two important risks that occupy my thoughts at night, the first would be the need to innovate and digitalise our bank, not only to catch up with the fast-changing banking landscape but also to provide unique and better products and services to our customers. Banks must be willing to spend a lot of money on technology, talent, and fintech to compete and survive. They will have to expand their sustainable finance product line and push the boundaries of open finance. The second is creating a proper risk culture in the organisation, because a strong and positive risk culture helps compliance and aids our employees in better managing our risks.

Philippa Herz, Chief Risk Officer, OneFamily

The pace of change in the risk environment and the increasingly diverse drivers of change can make for a busy mind. In the past, that pace of change largely reflected technological innovation. In more recent times we’ve also seen some marked social and cultural divisions, with divergent expectations and values held by different generations and social groups. We will need to keep evaluating what this means for what our customers and colleagues need and expect from us. It’s leading to a complex mix for the business environment. It’s also what keeps the job so interesting!

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