Corporate Risk Officers To Grow In Importance

by Robin Pilgrim, LawAndTax-News.com, London

13 May 2005

A newly-released survey by the Economist Intelligence Unit says that Chief Risk Officers will grow in number and influence.

The EIU's survey says that the number of chief risk officers (CROs) appointed to oversee enterprise risk is increasing as companies seek to address a growing range of business threats and increased regulatory pressures. 45% of major companies have already appointed a CRO or equivalent. Most CROs are concentrated in the financial services sector, but 24% of all firms say they plan to appoint a CRO in the next two years.

The main priority for CROs, according to the survey, is to ensure that organisations are in full compliance with regulations. Their success or failure in addressing this task will be crucial: survey respondents identified regulatory risk as one of the top two threats to global business, along with reputational risk. Monitoring emerging risks and extending risk principles into wider strategy are two other tasks that risk managers say will assume greater importance over the next three years.

CRO's have been widespread in the US for ten years, where they originated in the energy sector, and where they tend to have a more operational bias than the regulatory preoccupations recorded by the EIU.

The survey was conducted as part of the research for The Evolving Role of the CRO, a report written by the Economist Intelligence Unit and sponsored by ACE Insurance, Cisco Systems, Deutsche Bank and IBM. A total of 137 global risk officers participated in the survey, with approximately half of the respondents drawn from the financial services sector and the rest drawn from a cross-section of 16 other industries.

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