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What is the function of a chief risk officer?

Nov 09, 2011 Walt Wojoiechowski

It's been argued that organizations need to ratchet up their risk management policies to protect their assets and cushion themselves from market volatility. But how do such demand affect the management structure of a company? Increasingly, businesses are bringing on chief risk officers to handle top credit decisions and be the guiding voice for the firms' investment maneuvering. While the role of the CRO may vary from company to company, their are some uniform responsibilities these individuals should be adept at. "In my view, there clearly has to be a setting the stage for a CRO to be able to make a difference," said Carl Groth, group chief risk officer at Torus Specialty Insurance, at a risk management Conference in San Diego this week. "There are some very bright people out there who are CROs who haven't done well for one reason or another." Business Insurance magazine quotes Groth as asserting that CROs' lack of success is typically the result of a lack of necessary "ingredients" on the part of their organizations. For example, CROs cannot rely on the oversight of board members and audit committees to handle risk. A CRO must be devoted full-time to the understanding and application of risk.