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From Risk Management to Risk Navigation: Why Strategic Risk Officers Have Never Been So Vital – Or So Challenged – in Financial Services
Article
The world has become considerably more volatile, uncertain, and interconnected. While this change has been accelerating for years, recent challenges have brought it into sharp focus.
As a result, the chief risk officer (CRO) role within financial services has expanded well beyond its traditional remit. CROs are no longer merely tasked with mitigating risks— they must now advise broadly across a wider spectrum of issues—aligning closely with business growth while proactively managing downside risks. This shift demands not only refining existing skills but cultivating new capabilities. This adaptive capacity to respond and evolve to new demands -- whilst maintaining a steadfast clarity of purpose – is now essential to the modern CRO mandate. Managing risk in today’s environment is not just a proactive response to volatility, but a strategic lever for growth, positioning the CRO as a key player in shaping the organization's future.
Today, CROs must possess a unique blend of commercial acumen, strategic foresight, stakeholder influence, and leadership agility, positioning them as critical counterbalances to the CEO. The most forward-looking organizations increasingly recognize that a strong CRO-CEO dynamic is not just a competitive advantage—it’s a necessity. Success hinges not only on selecting the right leader but empowering them effectively, carefully balancing authority with accountability, and influence with restraint.
Drawing on market observations, interviews, and a Russell Reynolds Associates survey conducted with leading CROs, we outline how top financial institutions are adapting to these realities and offer recommendations for navigating this evolving landscape.
The expanding CRO mandate
The CRO function is no longer just about risk mitigation; CROs are now responsible for driving strategic resilience across the enterprise. In a recent RRA survey of CROs, “managing increased complexity and volatility” emerged as by far the most commonly cited challenge. This complexity and volatility stem from a multitude of factors, including:
Technological advancements, strategic disruption, and cyber threats
Technological innovation is fundamentally reshaping the financial services landscape. As one CRO we interviewed put it, “If technology is not central to your strategy, the firm will soon lack relevance.” Firms must be prepared to react to disruptive technologies that can rapidly alter their market position.
In financial services, both customer interface innovation and operational resilience are increasingly critical—not just for maintaining competitive advantage, but to meet rising regulatory and consumer expectations.
Technology also continues to create cyber and fraud risks. High-profile data breaches have demonstrated that cybersecurity is no longer just an IT issue—it is a broad strategic challenge that can affect every aspect of the organization. This will be further compounded by AI’s advancement and the continued systems integration within companies and across contracting parties. Similarly, financial crime remains at the forefront of risk concerns, requiring CROs to be forward-thinking and adaptive to ensure their organizations are not only protected but resilient.
Geopolitical and socioeconomic volatility
The global environment is more volatile than ever, with geopolitical tensions, trade wars, and civil unrest introducing significant risks and potential shocks for organizations. CROs are now expected to anticipate and mitigate risks stemming from international conflicts, shifting political alliances, and in-country polarization. These are not just peripheral concerns—they are central to today’s risk landscape, requiring CROs to take a forward-looking, anticipatory approach that safeguards the organization’s long-term success.
Regulatory change
As regulatory requirements evolve across financial services, CROs face increasing pressure to ensure compliance across multiple jurisdictions and complex regulatory frameworks. Boards and regulators expect CROs to not only manage risks, but also provide assurance that the organization is adhering to evolving standards. This has placed CROs in the spotlight, where their ability to navigate regulatory demands is critical to maintaining the organization’s reputation and operational license.
Influx of private capital
Another key factor fundamentally reshaping the financial services industry—and the broader economy—is the influx of private capital into markets once dominated by public investments. This shift is altering systemic risk by changing the financial underpinning of the economy and the flow of capital. CROs are developing more nuanced models that account for these new dynamics in response to regulatory scrutiny and risk management concerns. Given the scale of the sector and the variance of risk management maturity across private capital firms, concentration risk could become a major trigger in a future financial crisis.
Rising cost pressures
Simultaneously, CROs are tasked with managing regulatory requirements while also addressing intense cost pressures. “Doing more with less” is a recurring theme, as risk functions are expected to enhance efficiency without compromising effectiveness. CROs must find innovative ways to streamline processes, leverage technology, and transform their risk functions to deliver more value while controlling costs.
Expanding stakeholders expectations
The expectations placed on CROs by boards, governments, regulators, investors, and the public have never been higher. CROs must now manage the demands of multiple stakeholders, each with distinct priorities. This requires the ability to navigate complex stakeholder landscapes with diplomacy, tact, and credibility. The CRO role demands both partnership and challenge— balancing the paradox of ensuring transparent, productive communication while also being able to "hold the line" when necessary.
The evolving capabilities of the modern CRO
Financial institutions have already come a long way from the risk technicians of the past, but the stakes - and expectations - of risk leadership have never been higher. The role of the CRO has transformed, and with it, the skill set required to succeed.
Today's financial services CROs must possess a unique combination and balance of capabilities. Below are the most frequently cited capabilities required of CROs, ranked by how often they are mentioned in our discussions with boards, risk executives and their ExCo peers:
Enterprise strategist
Strategically aligns risk management with enterprise-wide objectives. Pragmatic, commercially aware, and able to integrate risk thinking seamlessly to drive growth without stifling innovation.
Agile thinker
Rapidly identifies, understands, and adapts to emerging interconnected risks. Translates complexity into practical actions, staying ahead in a fast-changing environment.
Transformation catalyst
Drives continuous evolution of the risk function and wider organization. Optimizes structures and processes, embedding risk management to support resilience, innovation, and strategic growth.
Relationship cultivator
Builds credible, trusted relationships with diverse stakeholders. Balances collaboration with independent judgment, effectively navigating tensions and championing organizational protection.
Balanced commercial integrator
Aligns risk management with commercial objectives. Anticipates threats and opportunities, ensuring short-term protection and long-term competitive advantage.
Systems architect
Designs and maintains efficient information flows and risk oversight systems. Empowers business units to proactively self-manage risks, enhancing transparency and strategic effectiveness.
Talent magnet
Attracts and develops future risk leaders, fostering team cohesion and continuous learning. Builds teams capable of navigating complexity and sustaining high performance.
Technology champion
Strategically leverages cutting-edge technology, data analytics, and real-time monitoring. Enhances efficiency, innovation, and proactive risk management across the enterprise.
Calm under pressure
Provides calm, steady guidance even under pressure. Demonstrates resilience, clarity, and decisive leadership, navigating uncertainty effectively when stakes are highest.
A challenging risk talent landscape for organizations
Many leading financial institutions have recognized the need for strategic CROs and are taking steps to upskill their risk leadership and capabilities more broadly. Investments in advanced risk management technologies, such as AI and real-time monitoring tools, are also enhancing risk understanding and effectiveness. However, challenges remain.
Limited talent pool
Despite these efforts, strategic risk leaders remain hard to come by. While some organizations value the development of risk talent and are looking at their talent needs holistically across businesses and functions, many are not moving quickly enough to build the bench strength needed to meet the growing demands of the role. As a result, CROs often find themselves compensating for deficits in their teams, inevitability leading to more of an internal focus on day-to-day operations and limiting their ability to focus on broader, strategic issues or cultivate external relationships and viewpoints.
Cultural misalignment
Cultural misalignment is a significant barrier to effective risk management within organizations. Investments in technology and talent are often undermined by other priorities or a lack of a strong risk culture. Without the right focus, leadership, and cultural foundation, even the most advanced tools and systems will fail to deliver their intended potential.
Moving from simply managing risk to deftly navigating it
Understand your current and desired risk maturity
Organizations must begin by assessing the maturity of their current risk approach. This goes beyond the risk function—it requires a holistic understanding of how the business understands, identifies, and manages risk front to back. If your dashboards are a sea of green, chances are, they aren’t measuring risks accurately. Most organizations are not where they would like (or need) to be when it comes to managing risk because the business environment is constantly evolving.
Develop a forward-looking view on risk talent
Organizations should adapt their talent assessment models to evaluate both technical expertise as well as the strategic, cultural, stakeholder and leadership qualities necessary to drive effective risk management. Traits such as intellectual curiosity and learning agility are particularly important for CROs. While technical expertise remains important, most organizations now recognize that broader leadership capabilities are equally—if not more—important when selecting a CRO.
The CRO is one of the most impactful and challenging roles within the C-suite; as such, organizations should introduce an additional layer of insight around potential CRO candidates – in particular, self-knowledge, values & aspirations, and wider impact & legacy. As the speed of change accelerates and the leadership context becomes increasingly complex, it is no longer sufficient to look at an executive’s readiness for the CRO role in the short term. Instead, organizations need to understand a leader’s ability to adapt, flex, and grow with the role.
Start early with CRO succession planning
Organizations must proactively prioritize CRO succession planning. Identifying and developing future CROs well in advance ensures leadership continuity and resilience within the risk function. It’s never too early to start planning for your next CRO. Effective succession planning goes beyond identifying a single successor—it requires establishing structured guidelines, search processes, training programs, mentorship frameworks, and ongoing talent monitoring to build a sustainable pipeline of future risk leaders.
Targeted development programs tailored to the unique demands of the CRO role are essential. These programs should focus on building the specific leadership muscles required to navigate the complexities of modern risk management while ensuring alignment with the broader business ecosystem in which a CRO must operate.
Build a proactive, enterprise-wide risk culture
Cultivating a culture that enables the right risk/reward balance for your entity is an enterprise-wide responsibility—not just the domain of the risk function. Organizations must embed risk awareness at all levels, ensuring that appropriate considerations are woven into decision-making processes across board, leadership and business.
Over-reliance on a single individual—such as the CRO—creates risk in itself. Instead, organizations should foster a culture where risk is understood, owned, and actively managed across all business functions.
Navigating a disrupted world: The new paradigm for identifying CROs
The rapidly evolving remit of the CRO has transformed it into one of the most dynamic and challenging roles in today's C-suite, shifting from merely managing risks to strategically navigating complexities and leveraging uncertainty for innovation and growth. Leading CROs now operate at the intersection of risk and opportunity, serving as strategic architects driving organizational resilience, transformation, and competitive advantage. To fully harness this potential, organizations must position the CRO function as a critical incubator for enterprise-wide learning and leadership development, empowering bold, strategic leaders who will guide the most resilient and high-performing enterprises of tomorrow.
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Authors
- Amelia Stubbs leads Russell Reynolds Associates’ global Risk and Controls practice. She is based in London.
- Ellen Yaffe leads Russell Reynolds Associates’ Risk and Controls practice in the Americas. She is based in New York.
- Daria Rokk leads Russell Reynolds Associates’ Risk and Controls practice in Asia Pacific. She is based in Hong Kong.
- Shad Ngam is a member of Russell Reynolds Associates’ Financial Services and Risk and Controls practice. He is based in Sydney.
- Ines Affolter is a member of Russell Reynolds Associates’ Financial Services and Risk and Controls practice. She is based in Zurich.
- Beijing Zhu is a member of Russell Reynolds Associates’ Leadership Advisory practice. She is based in Hong Kong.