I wrote about the “ideal” CRO Superhuman almost a year ago in a blogpost. Interestingly, this topic remains an evergreen. During almost all conversations about ERM sooner or later the question about the CRO’s ideal skill set come up.
In my earlier blog, I used the “decathlete” analogy quite frequently. Whilst this analogy is tangible, it probably isn’t the best explanation in a business context. Hence, I came up with a different, more business-relevant description. A good CRO has a “thorough understanding of the entire value chain” of the respective industry.
What does that mean? Taking the insurance industry as an example, a CRO must understand how risk management and capital provision interlude along the value chain. If we imagine the value chain as a line, then insured and capital provider sit at either end. In business reality, the risk and the capital pass through many hands and undergo multiple transformations. Each component of the value chain has its idiosyncrasies, uncertainties, upside and downside risk embedded in it. Hence, the understanding of the interlude and which ‘change’ triggers which reaction is the key.
In other words, the CRO’s ensures that the organisation
- understands both external and internal drivers that influence the value chain
- recognises, quantifies and mitigates downside risks and opportunities associated with these drivers in a consistent manner
(1) Any professional who has developed a thorough understanding of the entire value chain is a good candidate. Naturally, qualified actuaries and CIIs (or equivalents) with leadership experience are very well suited.
(2) a strong trait of constructive curiosity, excellent communication and influencing skills in all dimension of an organisations current set-up.
(3) a mind-set and corresponding actions to position good ERM as a strategic tool that supports all stakeholders.
Over the past years I’ve had the opportunity to support clients who asked themselves the “superhuman” question. Together we found a matching answer every time!
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