The chief risk officer’s skill set

Brian Hague, senior risk intelligence adviser at Rochdale Paragon Group, a CUNA partner, offered a breakdown of the skill set required for today’s chief risk officer during a breakout session Monday at the CUNA Governance, Risk Management & Compliance Leadership Institute in Denver.

Those skills include:

Leadership. “If properly structured, the risk officer is going to be one or of the executives that leads the business forward,” Hague says.

Business. “This means understanding limitations, opportunities, goals, and objectives,” Hague says. He predicts that the career path to the CEO’s office may increasingly go through the chief risk officer role “because of the breadth of knowledge it offers.”

Ability to measure risk vs. reward. “That means that we can tangibly and meaningfully understand the risks that we are taking,” Hague says. “That means understanding our tolerance metrics that apply to the business at hand and understanding that limiting risk too much isn’t a good thing.”

Communication. The chief risk officer must interact with a wide variety of people, including the rest of the executive team, the board of directors, middle management, and even staff, regulators, and auditors. As a result, communication is a key skill they need to possess.

Technology. Much of risk measurement, such as stress testing, is driven by technology, Hague says.

Strong financial background. “This is just a function of who we are,” Hague says. “We are financial institutions. You have to understand how we work.”

The ability to influence. “If properly structured, this role will be allowed to help the credit union shape its direction and persuade other senior managers that we may have to take more risk in some areas and less risk in others,” he notes.

Big picture perspective. The chief risk officer must be able to remove themselves from “the weeds” of the compliance and risk. They must take a 30,000-foot view and communicate that view to others, Hague says.

Emotional intelligence. “Being a chief risk officer can result in turf wars, so it takes a certain amount of emotional intelligence to rise above that,” Hague says. “The other executives have to trust the chief risk officer, whether it’s other executives, the board, or staff members.”

Change agent. “The chief risk officer might influence the direction of the credit union, and that could actually mean talking on more risk,” Hague says.