Leading CROs share their insights on how 2022 has shaped risk management so far
We have crossed the half way mark of 2022. Behind us lay six months of the highest inflation in four decades, one crisis taking over another and hitherto unforeseen disruptions to the financial landscape. We've asked CROs all over the world how their past six months have been and what they're most looking forward in the months to come and one thing is clear: Nothing has gone as they expected.
Federico Galizia Chief Risk Officer,
Inter-American Development Bank
(IDB)
What has been the most significant changes in the risk management landscape in the first half of 2022?
Pickup in worldwide inflation, likely indicative of long-term monetary excesses. This comes in addition to growing recognition of the continued expansion of socio-environmental risks.
What has been the biggest achievement(s) for you in the past six months?
In March of this year, the shareholders of the Inter-American Development Bank (IDB) approved a roadmap to increase the role of our Group in the management of three core risks for Latin America and the Caribbean: climate, social and development of the private sector.
What are the biggest challenges ahead for risk managers?
Integrating socio-environmental risk into existing frameworks, as the typical horizons used in risk management are too short for assessing the long-term effects of climate and social shocks.
What are you excited about or looking forward to in the coming months (specific events, any trends or changes that’s effecting your business etc)? Perhaps because of an increasingly challenging environment, there are opportunities for risk managers to further increase their strategic contribution. IDB’s Vision 2025 outlines five strategic opportunities where additional resources and enhanced risk management can make a difference: trade integration, digital transformation, small business, gender and climate action.
We worry for our customers, colleagues and communities as inflation ramps up and the cost of living becomes an increasingly difficult challenge for those with low levels of financial resilience. Supporting them as best we can to provide for their futures will mean that as risk managers we need to reconsider the some of the tolerances we apply and the data we oversee. Uncertain times can make it harder for businesses to make decisions – as risk managers we can support our businesses as a sounding board for considered judgement.
What are you excited about or looking forward to in the coming months (specific events, any trends or changes that’s effecting your business etc)?
Against the backdrop of a troubled world, I have recently been enjoying the simple pleasures of spending more time in person with colleagues and industry contacts. I’m excited to be to reconnecting with more people face to face and I look forward to being surprised by some unexpected conversations! As risk managers, keeping our networks wide, having a broad range of discussions at different levels and hearing fresh perspectives is so important for keeping pace with the evolving risk profile.
I’m also looking forward to working with my OneFamily colleagues as we continue to bring life to our vision of Inspiring Better Futures. We’re focused on three key areas – fostering financial wellbeing, supporting access to education and training, and improving life chances - and we’re volunteering with some great charity partners that do a fantastic job in these areas.
Peter Deans Former CRO, Bank of Queensland & Non-Executive Director of The Regtech Association and Trade for Good
It is hard to know where to start. We have been in a period of never-ending dislocation and disruption for several years now. Climate change, the covid pandemic, changing industry landscapes, dramatically changing financial market conditions and geopolitical issues have all been significant challenges to risk managers. On a positive note, risk managers have risen to the challenges presented, time and time again.
A constant challenge is managing the myriad of business as usual risks – be it operational risk, cyber security risk or compliance risk whilst keep their heads above the parapet and thinking about emerging risks.
What are you excited about or looking forward to in the coming months?
I think technology continues to offer new opportunities for risk teams to automate manual processes and identify, manage, and report risks in a more effective way. In addition, the continued rise and positive impact of the start-up sector is exciting for both the financial services firms and risk management. It’s great to see so much innovation.
I am not sure if I can call it an achievement, but I have had considerable success articulating the link to boards and executive teams on the link between robust risk management practices and a strong ESG profile. I see a lot more understanding of the benefits of investing in risk management.
The start of 2022 seems like a long time ago. The relative optimism that accompanied the expectation that we would soon be emerging from the pandemic was quickly replaced by the geopolitical turmoil resulting from the war in Ukraine, bringing with it profound economic and security implications affecting many of our key risk categories.
The need for businesses to think broadly about risk scenarios and prepare to respond quickly to navigate through uncertainty really does put risk management at the heart of business activity.
I was very pleased with the work on operational resilience and third party risk management that was done in preparation for the 31 March regulatory deadline. In common with ORSA, I think this is a piece of regulation that can really help to deepen the understanding that Boards and managers have of the business. It’s been helping us to prioritise activity – which can be as much about realising what you don’t need to do quite so much of, as it is about identifying what warrants more pace and attention.
Philippa Hertz Chief Risk Officer, Risk & Governance, OneFamily