Risk means different things to different people.
For as long as we can remember we’ve been fielding questions on which functions to put under a single risk role and which ones to keep apart.
There has also been a longstanding bias by leaders and sponsors for their risk teams to focus on what they’re most comfortable with instead of what’s most important.
In 2020 we were keen to identify those that are most important, and those with biggest need for improvement.
This was both within individual organisations but also across the spectrum.
In 2020 we launched a study of Chief Risk Officers and Audit & Risk Committee Chairs to get their views on what the priority areas were for a modern CRO team, and to assess how well they were performing in each area.
The aim was to get a handle on priority areas across all organisations and also provide insights for study participants for their organisations.
Over 20 Chief Risk Officers and Audit and Risk Committee Chairs from listed companies and large government departments responded, primarily from Australia but also internationally. Data has now expanded to around double this amount.
The model contains 16 elements most common in corporate risk functions.
This tool and data set now informs most of our risk strategy and risk transformation work on the premise that you can’t design a risk function or CRO role if you aren’t clear on what you want them to do.
We expected a few areas to focus on, but we were a bit surprised at some of the results:
- Six priority areas were common among most respondents.
- Principal risk assurance was rated at the highest priority, despite being a term not commonly used in Australia. (But well used internationally)
- Five of the highest-priority areas also had the biggest performance gaps. This includes strategic risk and emerging risk.
- Four priority areas exhibited lacklustre performance.
- Five areas took up the most time despite being rated as low priority.
- Only two priority areas were rated sound.
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Going through the process is an incredibly useful exercise for anyone setting the design or strategy for their risk function, or recruiting a new leader.
Circumstances change and it is useful to go through whenever there is a significant change in circumstances or stakeholders.
The study is now closed to the public, but is available for TDA coaching and advisory clients as part of their individual programs.
If you are not an existing coaching or advisory client perhaps this is a good opportunity to use this as a platform for doing so.
It might be the best money you spend all year.
Here’s a bit more on the survey and some ways to get involved.