Operational resilience in practice: Here’s how CROs navigate emerging challenges
As the world continues to grapple with a myriad of interconnected challenges, operational resilience is rapidly becoming central to risk management strategies of financial institutions worldwide. CRO Forum discussions on operational resilience at RiskMinds International shed light on the evolving nature of resilience and the crucial challenges faced by risk leaders today.
Understanding operational resilience
Operational resilience has emerged as a key pillar for organisations aiming to thrive amidst geopolitical tensions, financial disruptions, and environmental challenges. As Roxana Branowski, Senior Risk Advisor at International Monetary Fund (IMF), stresses, the need for resilience is top-of-mind for risk leaders. The discussion at RiskMinds International’s CRO Forum unearthed critical challenges and explored strategic focus areas for Chief Risk Officers.
What are the key challenges of achieving operational resilience?
Mutisunge Zulu, Chief Risk Officer at Zanaco Plc, shares that organisations face multifaceted risks, particularly in emerging markets. “I come from a country experiencing the worst drought in 40 years. We go without power for as long as 20 hours in a day,” Zulu shares. These circumstances force businesses to rely on costly alternative power sources, highlighting the need for robust risk strategies to ensure continuity and data security.
Michiel Haasbroek, Chief Risk Officer at Banque Internationale à Luxembourg, shares a different perspective, reflecting on how the banking industry has been reshaped by regulatory reforms and technological advancements. He posits that operational resilience is a response to the “polycrisis environment” of the past decade, characterised by heightened geopolitical tensions and extensive digital transformation. According to Haasbroek, one of the biggest challenges lies in understanding the intricate ecosystem of tech providers and ensuring stable operations in a rapidly evolving landscape.
How to build a resilient risk culture?
Achieving operational resilience requires more than just strategic planning; it demands a robust organisational culture that prioritises risk awareness and continuous learning. Zulu emphasises the power of awareness: “Learn the art of breaking it down and making them understand the language that we use is very important.” Zulu advocates for demystifying risk management and fostering an environment of confident risk-taking, where organisations view risk not just as a potential loss but as a platform for value preservation.
Haasbroek concurs, highlighting the importance of maintaining relevance and demonstrating the impact of real-life events in shaping risk culture. “It’s much easier for me to go to my boss and say, ‘we really need to enhance our cyber defences’,” Haasbroek notes, illustrating how tangible examples help secure executive buy-in for necessary investments in resilience.
What emerging risks should be on business’ radar?
The panel discussion also addressed emerging risks in the risk management landscape. Climate change remains a persistent concern, with its impacts felt across various sectors. Zulu points out, “We are dealing with El Nino effects,” reminding attendees of the global impact of climate change: rising temperatures, changing in rainfall patterns, and the increasing likelihood of extreme weather events.
Additionally, cybersecurity threats and rapid technological advancements pose significant challenges, necessitating ongoing vigilance and strategic adaptation.
Haasbroek identifies liquidity management as another critical area, stressing the complexities introduced by market dynamics and the velocity of digital transactions. The interplay between technology, liquidity, and market stability is an evolving challenge that demands a proactive and informed approach.
How do CROs need to evolve?
As the risk landscape evolves, so does the skillset required of today's CRO. Panellists agreed on the need for continuous learning and adaptability. Haasbroek emphasises that CROs should be critical thinkers who can challenge norms and ensure the organisation’s decision-makers make informed choices.
Zulu adds that humility and creativity are essential attributes for a CRO. “We are not the police; we are strategic advisory and solution partners,” he explains, encouraging a collaborative approach to risk management that focuses on strategic alignment and business acumen.
Conclusion: What are risk leaders’ role in an uncertain world?
The role of risk management has transformed from a compliance-driven function to a strategic partner in business operations. The insights from the CROs highlight the critical importance of operational resilience in navigating today’s highly dynamic risk environment. By fostering a culture of awareness, embracing continuous learning, and investing in resilient capabilities, organisations can better prepare for the uncertainties ahead.
Risk management is not static; it demands a forward-looking approach that aligns with the strategic goals of an organisation. As the landscape continues to shift, the capability to anticipate challenges and respond effectively becomes an indispensable asset for success in today’s complex world.