Chief Risk Officer: An Increasingly Vital Role in Effective Risk Oversight

The 2019 State of Risk Oversight report from NC State recently came out with some interesting results about the current state of risk management leadership in organizations.

The report breaks down results into four different industry-categories – large organizations, public companies, financial institutions, and not-for-profit.

Over the last five years, nonprofits have seen the biggest increase from 22% to 53% of organizations who are designating a Chief Risk Officer (CRO) or equivalent title to lead their risk management efforts.

Talk about a significant increase!!

Other industry-categories are up too over the last five years, but large organizations and public companies have seen a slight dip over 2018, which is surprising considering increased demands for better risk oversight.

We don’t know the exact reason why more organizations are appointing a CRO, but the fact that close to 60% of respondents in this year’s survey claim the volume and complexity of risks have “mostly” or “extensively” changed in the last five years is one likely explanation.

It’s clear that more organizations today are designating a CRO, which is an increasingly important role for many organizations, especially when the operating environment has gotten only more complex and riskier over time.

Who is the CRO reporting to?

By and large, according the NC State report, the CRO is formally reporting to the CEO or the President (48%), with a much smaller portion reporting to the Chief Financial Officer (18%), and a near equal percentage of CROs reporting to the Board or Board-level risk committee (20%). Nonprofit numbers closely resemble those of the full sample, but a much lower percentage of CROs at nonprofits report to the Board or Board-level committee.

Chief Risk Officer Responsibilities

What I have come across is that organizations have an executive who has several titles, one of which is “Chief Risk Officer” – whether formally or assumed due to responsibilities. The holding of multiple titles means that the CRO tends to be responsible for more than just “risk management,” with areas like compliance, legal, audit, or insurance also under the purview of the CRO.

Of course, these additional responsibilities divert time, focus, and people away from maturing the practices that will help the organization address threats or seize opportunities to achieving strategic objectives. While it sounds good to combine all of these things under a single person, it may not be the most effective method of using ERM to the benefit of the organization. Why? Because I know that thinking about risk and encouraging others to think about risk is a full-time job!

Also, as results from a survey of my readers last year, “tone-at-the-top” and “leadership” are the biggest challenges to ERM implementation. If the CRO is focused elsewhere, it will be difficult to add the true value that ERM can provide.

The CRO’s wide range of responsibilities coupled with limited financial resources, especially for nonprofits, means many organizations “try to figure it out” for themselves. In a way, I admire the guts and fortitude and persistence it takes to go this route because this is how I started.

However, this “go-it-alone” approach carries some negative consequences with it, including:

  1. You get tired of ramming into a brick wall (…or at least all the detours and backtracking you have to do).
  1. It takes much longer to figure out what works and to get valuable results.
  1. It opens your organization up to risks turning into reality without being prepared.

The decision to develop an ERM process on your own may sound like the right financial decision.

But wouldn’t you prefer your organization to have a solid grasp of its risks so they can be addressed before they become a problem?

While it may save some money in the short run, limited financial resources could be put at risk if a significant hit to your reputation or brand were to come along.

In the end, it’s good to see more so many organizations, especially nonprofits, taking risk management seriously.

Nonprofits are just like any other in that they must attract support for their mission or cause. ERM is one tool these organizations can use to ensure they have the biggest impact possible for the least amount of money.

Has your organization, nonprofit or otherwise, appointed a CRO to lead its ERM and other risk management efforts?

I am interested to learn more about risk management leadership in your organization and elsewhere. Please leave a comment below or join the conversation on LinkedIn.

And if your organization is struggling to make progress with ERM or needs to determine if a CRO is needed, please feel free to reach out to me to discuss your situation today!

Sign Up For Our Newsletter

Sign Up For Our Newsletter


Meet Carol

Helping companies achieve their vision and strategy, and succeeding in today's turbulent world, is something I'm honored to be a part of. Whether you're an occasional blog visitor or a long-term client, thank you for letting us be a part of your journey.

Most Recent Posts

The 12 Days of ERM Christmas

Without a doubt, one of my family’s favorite holidays is Christmas. Part of the fun, especially for our son, is seeing what “Santa” brought, but most importantly, we treasure the spirit of peace and goodwill the season brings. And after what seemed to be a never-ending warm spell, the weather is expected to be good…

Read More

Don’t Let Goals and Initiatives Be Blindsided by External Events

As the end of the year draws near, I think we’d all agree that while it wasn’t without its challenges, this year also wasn’t quite as turbulent as the previous two. While a lot of people are juggling company parties, shopping for friends and family, and special activities for the kids, most companies are putting…

Read More

Going the Distance: Ensuring Successful Execution of Strategic and Annual Initiatives

Strategic planning is a challenge – of all people, I understand… After all the meetings, risk and data analysis, and brainstorming of the preceding months, it’s tempting to think this is the end of the road and you can relax. Contrary to this common perception though, this is exactly not the time to relax, but…

Read More

Avoid Rookie Mistakes and Protect your Internal Reputation

Be honest – have you ever done something that you soon realized was a real rookie mistake? Me raising my hand… Considering the nature of ERM’s role to ask questions and challenge assumptions (often during conversations with executives), it can be argued that, in at least some cases, the expectations bar for risk professionals is…

Read More

ERM at Thanksgiving – An Illustration of Risk Management in Action

On occasion, I like to take some of the concepts we risk professionals think about in our jobs and apply them to different personal situations…take some of the same concepts we use when working with executives to develop corporate strategy and manage risks or uncertainty around that strategy. It’s Thanksgiving week in the U.S. –…

Read More

Why Quantitative Risk Assessment is Not Just the Best But the Only Option – A Conversation

Periodically, I have the pleasure of speaking one-on-one with Hans Læssøe on a variety of topics around ERM, strategic risk, and other issues and trends. As you know from my previous conversations (here, here) and posts featuring his work, Hans was formerly a practitioner at the iconic LEGO Company, but even more notably, is a…

Read More

The Three Lines Model – 3 Reasons Why I Don’t Like It

Everyone likes a clear-cut template that offers an easy way to create or manage something…I mean what’s not to like about a step-by-step process for accomplishing what you want? Sometimes this can work without any issues, such as the case with the Project Management Book of Knowledge (PMBOK), ISO 9001 standard, or a new cooking…

Read More

5 Avenues for Expanding your ERM Knowledge

One thing I was taught to appreciate from a young age was the value of education and knowledge. It didn’t necessarily matter what the subject was, just that I always maintain a learning or growth mindset regardless of my current status in life. This mindset has served me well over the years, and it’s a…

Read More

Storytelling and Risk Management – Developing Skills that Technology Cannot Replace

It’s amazing how technology has developed and changed our working world over time. Imagine trying to run my risk and strategy consulting firm without tools like Zoom, Box, Slack, and other ERM-specific technology tools. There is no way we would be able to serve our clients the way that we do. Just consider how the…

Read More

3 Phases to Creating and Launching an ERM Program Focused on Organizational Success

If you’ve been handed the task of creating an ERM program for your organization, let me first offer my congratulations quickly followed by my empathy for the task ahead of you. I don’t say that to scare you but to provide a small dose of reality. Building, launching, and refining an ERM program that is…

Read More