It has been a long time coming – but the chief risk officer role seems to have finally, quietly come of age. Although enterprise risk management pioneer James Lam first coined the CRO title over 20 years ago when he was at Fidelity Investments, acceptance of a C-level executive with responsibility for risk oversight was not widespread until recently.
Today, virtually all insurance and reinsurance companies have created a full-time CRO position; indeed many non-insurance industry corporations now have a CRO. More important, the job has evolved and, as Zurich’s Axel Lehmann explains in these pages, its profile lifted significantly following the financial crisis in 2008.
The biggest post crisis issue for insurers in Europe is Solvency II – and CROs are centre stage here, guiding their companies through a difficult process of reform, which as Scor’s Phillipe Trainar explains, will transform insurance into an industry of the future. As Lehmann says in his interview, nowadays any company that is serious about having a comprehensive risk view from an independent position is probably moving to a set up where a CRO has direct board access.
Insurance company CROs are increasing in number and gaining in influence – and they are getting organised. The North American CRO Council launched recently under the chairmanship of Michael Mahaffey, CRO of Nationwide. A grouping of CROs at the continent’s biggest insurance corporations, the Council will provide an important forum for ERM related issues to be discussed.
But the Council will have a broad agenda, he promises, and won’t ‘simply move the ball around without scoring any goals’.
CROs certainly have a lot of issues to work with, from regulatory reforms to emerging risks. Recent natural catastrophes have revealed complex accumulation exposures for insurers (and their clients), for example. CROs like Munich Re’s Jo Oechslin are responding with new ideas for dealing with complex risk that go beyond rigid risk management.
CROs in financial institutions are no longer boxed in by risk control. Their remit has widened and as Samir Shah, CRO of Chartis explains, risk management can now be seen as a basis for competition.
So while it is a challenging time to be a CRO, the valuable insights contained in these pages reveal that CROs are not simply reacting to events – they are also turning them into opportunities.
Garry Booth, CRO Risk Forum editor and Reactions contributing editor
Read more from the CRO Risk Forum
CRO Risk Forum: Zurich's Axel Lehmann
The influence of the chief risk officer is spreading through the insurance industry, says Axel Lehmann, chief risk officer of Zurich Financial Services Group and chairman of the CRO Forum More
CRO Forum: Nationwide's Michael Maheffey - A new vision for CROs
Michael Mahaffey, CRO of Nationwide, is chairman of the recently formed North American CRO Council. Here he explains to Garry Booth how the Council will work for its members. More
CRO Forum: Munich Re's Joachim Oechslin - Getting complexity under control
Can complex accumulation risks be controlled? Probably not completely, says Munich Re CRO Joachim Oechslin, but progress is being made More
CRO Forum: RSA Group's Jon Macdonald - Putting ORSA theory into practice
In light of Solvency II guidelines on how to implement Own Risk and Solvency Assessment (ORSA), many firms are looking even more closely at how risk and the business work together, says RSA Group CRO Jon Macdonald More
CRO Forum: Scor's Philippe Trainar
Solvency II is far from perfect, but it must be kept on track, argues Philippe Trainar, CRO at Scor. More
CRO Forum: Arthur J Gallagher's Sarah Dalgarno
Sarah Dalgarno joined Arthur J Gallagher in 2006, and just a year later was promoted to chief risk officer and appointed to the board. Here she tells Garry Booth how the job has changed beyond all recognition. More
CRO Forum: Frank Fiorille of Paychex
Frank Fiorille, director of risk management at Paychex, tells Garry Booth how he transformed the risk management discipline from a bottom-line protection measure to a “strategic value-creation engine”. More
CRO Forum: Geneva Association's Patrick Liedtke - Watching the directives
The Geneva Association, alongside Swiss Re and the CRO Forum, recently organised the 7th CRO Assembly for insurance professionals. Here Patrick Liedtke, secretary general and managing director of The Geneva Association, reflects on the meeting. More
CRO Forum: Samir Shah, CRO of Chartis - In pursuit of risk-adjusted performance
Chartis CRO Samir Shah believes risk management is a basis for competition and not for policing the company. More