Internal Model Industry Forum (IMIF)

Role of the Chief Risk Officer & Chief ActuaryDate: 13th October 201520 responses

Conclusions• Most organisations surveyed had a CRO and 40% of responses were

from CROs themselves• 63% of CROs were actuaries, 16% members of IRM, 16% members of CII

and 21% accountants (some had multiple designations)• 51% felt that the IRM professional standards were very/helpful in

defining skills and competencies of a CRO. (33% had not yet read the document).

• Top skills for CRO are are risk management, risk culture & appetite, communication and organisation understanding. (Change management is quite lowly scored).

• Top competencies for CRO are integrity & values as well as influence.• The prime external stakeholder of CROs are the regulator.• However over next 5 years 40% anticipate less emphasis on regulation.• There will be more focus on commercial decision making, efficiency &

effectiveness of the risk function and business planning & strategy.

• In many cases the CRO position was originally borne out of regulatory and other external drivers rather than value considerations.

• As the regulatory landscape becomes more stable the CRO community is again looking towards the evolution of the role.

• There is evidence to suggest the role of the CRO is becoming more strategic, focussing on activities which create value.

• But…as an industry, the insurance sector is a long way from a common view of the CRO role – as shown in the survey results and the high levels of research and development in this area.

• CRO’s come from a wide range of professional backgrounds and the IRM are uniquely placed to make a valuable contribution to the debate on the focus and purpose of the CRO role.

• As a result, the IMIF plan to make the role of the CRO a focus area for 2016.

Where Next?

• The objective of the project is to build out aspects of the Professional Standards in Risk Management aimed at the Leadership Level.

• The output will be formed of one or more guidance notes which provide practical insight into the components of the CRO role which are seen as the greatest contributors to value.

• Focus areas are likely to include the CROs role in:– Strategy development and evaluation– Business planning– Effective risk oversight– Model governance and validation (not just internal models)– Risk appetite, tolerance and reward

• In recent months the IRM have been building support from within the CRO Community and other stakeholders such as the PRA and FRC. We have received significant interest but if you are willing to get involved please let us know.

• Look out for our future survey in this area where we will be looking for input from CEO’s, CFO’s, COO, NED’s and other non-risk stakeholders.

IMIF CRO Project