EC suggests CROs as important as CFOs in banks

Chief risk officers could be as powerful as the CFO in the boardrooms of
financial institutions, according to proposals from the
European
Commission.

In the EC’s
green
paper “Corporate governance in financial institutions and
remuneration policies”, it said that the failure of risk management functions
during the financial crisis through their lack of authority to communicate with
boards required enhancement of the status of the CRO.

“…It seems desirable that the chief risk officer should have at least equal
status to the chief financial officer within the internal organisation of a
financial institution, and that they should be able to directly report any
risk-related problem to the board of directors,” said the paper.

The EC also invites respondents to consider whether the CRO should report
directly to the board, and whether IT tools could help to improve the quality
and speed at which information concerning significant risks is reported to
directors.

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