Pub. 2 2013 Issue 2

February/March 2013 23 l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s frame the breadth and depth of control testing, evaluate business operations, and participate in the evaluation of newproducts and business opportunities. New regulations are also causing institutions to rethink their management structure and add a CRO. What makes an effective CRO? What qualifies a person to be a CRO? The answer lies in the experience you already possess. w A long tenure at the financial institution Having a long tenure at the institution is a major asset for being a suc- cessful CRO. You have been instrumental in putting in place or advising on a number of initiatives and business lines. You also know well the people who need to be encouraged to embrace a more risk-based approach to their work. And, you are respected by the staff, C-suite, and Board, which is crucial because they will look to you for answers and guidance. w Aholistic view of the institution gained from previous roles Having a holistic view of the institution is absolutely crucial to be- ing an effective CRO because it is essential in creating and overseeing an enterprise-wide management program. It is extremely hard to walk into an institution and gain this perspective. Instead, it comes from understanding the culture and how daily work gets done, and holding positions in which you must have both an up-close and enterprise-wide view of the business. w Having good judgment and integrity The other executives, who you served in the past, are now turning to you for guidance on business strategy and counting on your sound judgment. In the role as CRO, your reputation for integrity will help you persuade everyone in the institution, from junior associates to Board members, that they must embrace a risk-focused view of their work and trust you when recommendations for change are based on the institution’s best interest and not your own. The CRO and ERM: Adefinitive era for financial institutions Because of the combination of external forces, internal needs, and the qualities one possess, the institution will come to an important decision, and select the CRO, one of the most important people in your financial institution. The institution’s financial well-being, its ability to improve delivery of products and services, and its survival in an increasingly competitive and regulated environment depends on howwell it manages and mitigates risk and practices enterprise risk management. A newly-minted CRO said to me recently, “This will be known as a definitive era in banking with the CRO in place and enterprise risk man - agement being practiced.” That’s something you can tell the CEO when it comes time to expand your team’s capabilities. Michael D. Cohn serves as Director of WolfPAC Solutions group and is a Principal at Wolf & Company, P.C. He provides risk management advisory services and board training to community based financial institutions. He can be contacted at mcohn@wolfandco.com or (617) 439-9700.