Institute of Risk Management
How to hire a great Chief Risk Officer A guide to the recruitment of Chief Risk Officers and other senior risk professionals
www.theirm.org An IRM Group Company Developing risk professionals Contents Foreword
Foreword 3 Effective risk leadership is an essential component of a healthy risk culture. Corporate governance About the IRM 4 codes around the world have underlined that effective risk management requires the right people and resources to be in place. They have also emphasised the importance of clear accountability for IRM project team 5 this function. Ultimately, the responsibility for risk management rests with the board, but that board The importance of hiring great CROs 6 needs to have confidence that they are delegating day-to-day responsibility to a suitably competent Introduction 6 person, who will also be responsible for giving them the highest quality advice to support risk based decision making. An excellent risk management function, with a wise and competent leader, will add The changing CRO role: Leadership, culture and collaboration 6 value by allowing the organisation to achieve objectives by exploiting opportunities and by taking Steps to hiring a great CRO 8 the appropriate amount of risk, thus protecting people, assets and reputation. Understanding the role 8 Whether they are called Chief Risk Officer (CRO) or Risk Director or Head of Risk Management, Identifying key skills 9 the hire of the top risk person in the organisation is an important appointment. This applies not Change, leadership and behaviour based hiring 10 only in financial services, where there may be regulatory requirements to comply with, but in organisations of all types, public and private, and in all sectors where excellent risk management Change 10 is going to underpin success. In a rapidly changing world, organisations are facing new risks and Leadership 10 opportunities associated with digital disruption, geo-political and economic volatility, environment and sustainability responsibilities and social change. Risk management is changing fast and the CRO Behaviour based hiring 11 must be up to the challenge. The hire of the CRO is of course not undertaken in isolation, but in the Recruitment process 12 context of the culture and risk maturity of the organisation, the objectives of the board and the skills External support options 12 and experience of the existing team driving and supporting risk management.
How to choose the right executive search firm 13 IRM has been at the forefront of defining professional standards for risk management since its Other factors in the recruitment process 13 formation in 1986. This document builds on our body of expertise to provide guidance on how to define top risk roles, not only in terms of the technical risk knowledge and skills required but also Unconscious bias 14 the personal and behavioural characteristics that are needed. To do this we have fused modern Search process checklist 14 recruitment expertise with the practical experience of our senior members to produce this guidance. Candidate assessment and interview 16 We have also recently developed an advisory service to provide more direct and tailored assistance to organisations who want specialised help with the recruitment process. Psychometric testing 16 CRO behavioural competencies - sample question checklist 17 I would like to thank all those who have been involved in drafting and reviewing this document which we hope will help produce a new generation of outstanding global CROs. Risk management sample technical question checklist 18 IRM risk management competencies - leadership level assessment 19 Induction and ‘on-boarding’ 21 Socrates Coudounaris, How the IRM can help you 21 BEng (Hons) MSc FCII CIP CFIRM IRM Chair Risk Management Director, Reinsurance Group of America
November 2019
2 3 About the IRM IRM project team
The IRM is the leading professional bo