Today’s global economy is highly competitive. One wrong move can have a disastrous impact on the future well-being of a business. Organizations today are investing in risk management to avoid or minimize the negative effects of financial threats. Large corporations and financial institutions with a lot of money at stake often will hire a Chief Risk Officer (CRO). These senior executives stand at the top of the corporate ladder. They identify, analyze, and mitigate any internal or external events that could threaten the company’s livelihood. CROs play prominent roles in implementing risk management controls across all organizational departments. Chief Risk Officers use their financial expertise to create effective reporting policies and carefully monitoring for critical risks.
Salary
Based on data from the BLS, the median yearly salary for top chief executives, including CROs, working across the United States is currently $173,320. On average, Chief Risk Officers will bring home $180,700 each year or $86.88 per hour. CROs who work for banks earn slightly more at $180,970. But those managing risks for private corporations generate a higher average salary of $216,100 annually.
Beginning Salary
When just being promoted, Chief Risk Officers could land in the bottom tenth percentile with a decent salary of $72,750. However, CROs with years of success often pass the quarter million mark annually. There’s really no earnings limit. After all, it has been reported that Bank of America’s CRO, Bruce Thompson, earns an annual salary of $800,000.
Key Responsibilities
Chief Risk Officers are given a tremendous amount of responsibility in pioneering the company’s entire risk management program to promote long-term financial health. CROs meet with other members of the executive board to find innovative methods for minimizing threats in accordance with government regulations. Typical daily duties could involve:
- overseeing audits
- reviewing compliance
- documenting action plans
- defining risk control policies
- generating management reporting tools
- providing in-house user training
- evaluating market trends
- creating a global IT risk strategy
The Chief Risk Officer acts as a guard for protecting the organization from:
- fraud
- penalties
- security breaches
- lawsuits
- investment losses
Necessary Skills
Before advancing into the role, Chief Risk Officers must have critical thinking and problem-solving skills to quickly stop threats to the institution. Good verbal and written communication skills are a must for CROs to present their risk assessment results to the board. CROs must have ethical leadership skills for overseeing staff across the company’s departments, including:
- compliance
- finance
- accounting
- fraud prevention
- human resources
- legal
Analytical and math skills are crucial for Chief Risk Officers to interpret vast amounts of performance data. CROs should have good organizational skills with an attention to detail in running the risk management unit. Computer skills are also important for the Chief Risk Officer to use complex auditing and statistical analysis software in monitoring risks.
Degree and Education Requirements
Experience reigns supreme in being promoted to CRO, but candidates for this chief executive position must have at least a four-year bachelor’s degree. Most aspiring CROs start their careers with an undergraduate major in one of these:
- finance
- economics
- business administration
- statistics
- management
The majority of employers today prefer hiring a Chief Risk Officer educated at the graduate level though. Going on to achieve a Master of Science in Finance (MSF) or Master of Business Administration (MBA) would expedite advancement. For good job preparation, fill up on electives in:
- crisis management
- risk assessment
- internal auditing
- fraud prevention
- corporate compliance
- IT security
Earning a Doctor of Business Administration (DBA) could also be helpful for moving into the executive boardroom.
Pros and Cons of the Position
Being named an organization’s Chief Risk Officer is a dream come true for many business leaders with a finance background. Of course, CROs receive handsome six-figure salaries that can grow exponentially with bonuses and excellent benefits. CROs enjoy a supreme amount of authority in directing the risk management policies and procedures of the company. Chief Risk Officers lead staff and collaborate with other senior executives. This is ideal for extraverts. Reaching the position of CRO provides a great sense of accomplishment and prestige in the business world.
However, added power comes with more stress since CROs are faced with make-or-break decisions that impact the organization’s stability. Most Chief Risk Officers will work beyond the traditional 40-hour week. CROs must wade through complex legal liabilities and can be held accountable for wrongdoing. Job competition is extremely fierce since only large companies have a CRO.
Getting Started
The pathway towards becoming the Chief Risk Officer is long and arduous. While earning your bachelor’s and master’s degree, jump on every opportunity to get real-world business experience in risk management. Most accredited business schools will have a Career Services department for finding:
- internships
- co-operatives
- applied consulting gigs
Climbing the corporate ladder is mandatory for advancing into the CRO role. You’ll likely start your career in entry-level:
- finance
- compliance
- internal auditing
- accounting
Most corporations will require that potential Chief Risk Officers have at least 10 years of relevant experience, although 20 years is sometimes required. To increase your responsibility, keep advancing into positions like:
- risk manager
- financial manager
- compliance officer
- internal audit director
Pursuing Certification in Risk Management Assurance (CRMA) through the IIA can aid in advancement. You must have over 24 months of controls-related experience and pass a 100-question exam for certification.
Future Outlook
According to the Global Association of Risk Professionals (GARP), demand in risk management is rising in financial and non-financial institutions. Since the Great Recession, companies have been increasingly worried about regulatory compliance and maintaining good credit standards for avoiding penalties. Many organizations are expanding their operations globally as the economy recovers. This will require the added attention of risk managers to mitigate any threats to success. The BLS predicts that the employment of top executives like CROs will only grow by 11 percent. Fierce competition is likely because there’s only one Chief Risk Officer per company. Job openings are also usually filled internally with promotions.
Overall, the Chief Risk Officer is held accountable for implementing effective controls that reduce significant risks to a business. CROs use their strategic planning abilities to coordinate the organization’s enterprise risk management (ERM) approach. Most will play a vital part in overseeing these areas of business operations:
- insurance
- internal auditing
- compliance
- fraud prevention
- information security
If you work towards becoming a Chief Risk Officer, you could eventually have a lucrative, rewarding career keeping companies productive and profitable.
Related Resources:
