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What Every Chief Risk Officer Needs Line of Sight On
- Julien Haye
- 2 days ago
- 18 min read
Updated: 2 days ago
Introduction: What Should a Chief Risk Officer See That Others Might Miss?
Boards rely on their Chief Risk Officer (CRO) to provide a clear view of the organisation’s risk exposures. Yet the real value of the role lies not in reporting what is already known, but in surfacing the signals that boards and executives might otherwise overlook.
The CRO role has expanded significantly in recent years. Once seen primarily as a compliance and control function, it is now recognised as a strategic position at the heart of governance. Boards expect CROs to connect risk appetite with strategy, test resilience under pressure, and provide foresight on systemic and emerging risks and uncertainties. Regulators reinforce this expectation, especially in financial services where risk professional independence is a formal requirement. Investors and stakeholders also look to the role as a source of assurance and trust.
The demands are growing because the environment is more complex and interconnected. According to our own surveys, risk leaders cite people and leadership vulnerabilities alongside technology and cyber dependencies as their greatest exposures. Disruptions cascade across supply chains, climate shocks test capacity, and artificial intelligence introduces new governance challenges. No single risk management framework is sufficient on its own. CROs must integrate culture, controls, resilience, financial capacity, and foresight into a single line of sight for the board.
In our experience, the strongest CROs position risk as a strategic capability. They demonstrate that effective oversight is not about reducing risks but about equipping leaders with the intelligence to achieve their goals responsibly. They help boards see how appetite, tolerance, and capacity interact with transformation, culture, and resilience. They show that risks can be anticipated and managed in ways that strengthen confidence and execution.
This article explores the 13 areas that every Chief Risk Officer should have line of sight on. Each dimension represents a critical aspect of strategy, governance, and resilience. Taken together, they illustrate how the modern CRO enables boards and executives to navigate uncertainty with clarity, trust, and foresight.
Table of Contents
The Evolving Role of the CRO
In our view, the Chief Risk Officer (CRO) has become one of the most strategically significant roles in modern organisations. Traditionally seen as a control function, the position was once described narrowly in terms of compliance, monitoring, and regulatory reporting. Today, the role has shifted decisively: boards and executive teams increasingly expect the CRO to act as a strategic advisor, helping to shape strategic decisions that balance risk, resilience, and growth.
A typical Chief Risk Officer job description reflects this evolution. Beyond designing frameworks and potentially overseeing compliance, CROs are now expected to provide forward-looking analysis, translate risk insights into strategic options, and give the board a clear line of sight into both exposures and opportunities. The emphasis is no longer only on loss prevention, but on enabling better-informed decisions across the business.
In some organisations and regions, the role is described as Chief Risk Management Officer (CRMO). In most cases, this is simply an alternative title for the same position. Where a distinction is made, the CRMO is generally associated with a stronger operational focus on frameworks and compliance activities, while the CRO retains the broader mandate to connect risk intelligence with governance, strategy, and culture. In practice, it is rare to see both titles used separately within the same organisation.
The role also varies across sectors. In banking and financial services, the responsibilities of a Chief Risk Officer are often codified in regulatory expectations, for example under the Senior Manager Regime in the UK. CROs in banks must demonstrate independent authority, provide assurance over credit, market, liquidity, and operational risks, and act as a counterweight to business ambition under prudential frameworks such as Basel. In non-financial industries, while the technical detail may differ, the demand for independence and foresight is no less important. Here, the CRO is expected to oversee emerging risks such as supply chain resilience, cyber security, and climate exposure, while also enabling transformation programmes and innovation.
In every case, the role of the CRO is expanding because the risk landscape is more interconnected and less predictable than ever before. Whether in a global bank or a fast-scaling non-profit, today’s CRO is measured on their ability to help the organisation anticipate disruption, navigate uncertainty, and execute its strategy.
Strategic Alignment
One of the most important responsibilities of a Chief Risk Officer is ensuring that risk management is fully aligned with the organisation’s overall risk strategy. Risk strategy defines how the organisation balances growth, resilience, and compliance, and how it positions itself to create value under uncertainty. The CRO’s task is to make sure that the frameworks used to manage risk — appetite, tolerance, and capacity — connect directly to this strategic intent.
At the core of this alignment is the distinction between risk appetite, risk tolerance, and risk capacity.
Risk appetite defines the level of risk the board is prepared to accept in pursuit of objectives.
Risk tolerance sets the thresholds for escalation when risk levels fluctuate.
Risk capacity reflects the financial, operational, and cultural resources available to absorb risk.
In our experience, and through our work with clients across sectors, we consistently find there is significant scope for improvement in aligning these frameworks with strategy and decision-making. Appetite statements are often drafted as static policies, tolerance thresholds are disconnected from escalation behaviours, and capacity is treated narrowly in financial terms. The result is that frameworks exist on paper but fail to shape the real machinery of planning, investment, and transformation.
Recent polling we ran with the risk community on LinkedIn highlights these gaps clearly. Out of 99 respondents, the biggest blockers to embedding risk appetite were:
· 36% cited limited executive buy-in.
· 36% pointed to lack of alignment with strategy.
· 19% highlighted unclear ownership.
· 8% noted an excessive focus on regulatory compliance.
We also asked a wider audience of 253 respondents which of the three core risk concepts — appetite, tolerance, or capacity — was least understood in their organisations. Nearly half (49%) said all three remain misunderstood. Among the rest, 19% highlighted risk appetite, 19% risk capacity, and 13% risk tolerance as the most problematic.
For CROs, these findings reinforce a critical challenge: even when frameworks exist, they often fail to guide the decisions that matter most. The CRO’s role is to close this gap by translating appetite, tolerance, and capacity into actionable guidance for executives and the board. Strategic alignment means making trade-offs explicit — between growth and resilience, innovation and control — and ensuring those trade-offs are visible in real time when investment, transformation, or restructuring decisions are being made.
Strategic alignment connects risk oversight with decision-making at every level. When boards and CROs embed this discipline, they strengthen resilience, protect value, and build long-term trust.
👉 Ready to review your organisation’s strategic alignment?
Change and Transformation Oversight
For many organisations, the greatest risks do not come from day-to-day operations but from moments of transformation. Mergers and acquisitions, digitalisation, restructuring, and large-scale investment programmes create both opportunity and exposure. One of the core responsibilities of the Chief Risk Officer is to provide oversight that ensures these initiatives remain aligned with appetite, tolerance, and capacity.
Transformation and change management risks are inherently complex because they cut across multiple dimensions of the business. They often involve financial exposure, operational disruption, cultural change, and reputational stakes all at once. From experience, and connecting to the previous section, we find that many organisations lack the capabilities to identify, assess and manage the risks arising from change and transformation initiatives. In addition, risk appetite and tolerance often fail to reflect the transformational outlook of the organisation, leading to overly conservative “limits.” Capacity constraints — whether financial, operational, or human — are also not well understood or factored into decision-making.
This misalignment can be particularly acute when organisations run multiple concurrent transformations. Digital upgrades, regulatory change programmes, and restructuring efforts frequently overlap, stretching both management bandwidth and risk capacity. A recurring example is data transformation programmes: without coordinated oversight, risks are assessed in silos, resources are over-stretched, and boards struggle to see the aggregate impact across the organisation.
The CRO’s role is to act as a counterbalance to this fragmentation. Effective oversight requires:
Embedding risk appetite into programme governance so risks are escalated before they exceed thresholds.
Testing the resilience of change processes — for example, how the organisation would respond if timelines slip, budgets overrun, or critical dependencies fail.
Integrating risk views across all major initiatives, providing the board with a consolidated picture of transformation exposure rather than a series of disconnected reports.
In our experience, organisations that succeed in this area treat the CRO as a strategic partner to transformation leaders. Instead of arriving late in the process, risk insights are built into business cases, programme milestones, and executive decision gates. This ensures that investment and change are not only ambitious but also achievable within the organisation’s true capacity.
Emerging and Systemic Risks
The role of the Chief Risk Officer includes anticipating risks that can reshape strategy. Emerging risks are not yet fully understood or measured and can significantly affect performance once they materialise. Systemic risks develop across interconnected networks and can create cascading effects once thresholds are breached.
Priority domains include:
Climate and sustainability, including regulatory change and physical impacts
Cyber and technology, including ransomware, data breaches, and AI governance
Geopolitics and macro shifts that influence markets, supply chains, and capital access
Market and financial contagion across sectors and geographies
In Aevitium’s advisory work, many organisations address these domains in separate streams. Cyber often sits within technology teams and climate within sustainability teams. A systemic view creates stronger outcomes. A cyber incident can interrupt third-party providers and create operational resilience events. Climate shocks can stress supply chains and capital simultaneously. A systemic map reveals these connections and supports earlier intervention.
Evidence from our own LinkedIn polling reinforces this picture. In a poll of 61 respondents, people and leadership emerged as the largest area of vulnerability at 43%, and technology and cyber followed at 36%. Respondents also highlighted supply chain dependencies. These signals point to interconnected exposures that benefit from integrated oversight by the CRO.
Effective CRO practice for emerging and systemic risks includes:
Establishing a cross-domain risk map that links climate, cyber, third parties, and operational resilience
Defining early-warning indicators and risk velocity thresholds that inform escalation and decision triggers
Running multi-hazard scenarios that test cascades across services, partners, and capital
Integrating insights into strategy reviews and board reporting to align appetite, tolerance, and capacity with the external environment
Interdependencies and Cascade Effects
While systemic risks often emerge from the external environment, interdependencies inside the organisation can be just as destabilising. These dependencies across services, processes, people, and third parties often look stable in isolation. The real exposure comes when they fail together.
Typical vulnerabilities include:
Critical third parties where a single provider underpins multiple services.
Shared data flows or platforms that link customer, operational, and regulatory processes.
Key personnel dependencies, where leadership gaps create bottlenecks in governance.
In our experience, many organisations identify their critical services but stop short of mapping how those services connect. For example, resilience assessments may highlight a payroll system or a data warehouse, but not how disruption in one cascades into missed regulatory filings, financial penalties, and reputational damage.
The CRO adds value by:
Highlighting single points of failure that underpin multiple functions.
Testing cascades under plausible stress scenarios (e.g., a cyber incident that simultaneously impacts operations, customers, and regulatory reporting).
Framing the aggregate impact for the board so appetite and capacity are assessed against the whole chain, not individual components.
This lens turns operational detail into strategic insight. For boards, the question becomes not only “Is this risk under control?” but “What happens if these risks combine, and can we still deliver our most critical services?”
Culture and Escalation
Even the best-designed frameworks can fail if the culture does not support timely escalation. For a Chief Risk Officer, one of the hardest but most important responsibilities is ensuring that issues surface early enough to be acted on. In practice, many risks only reach the board once they have already crystallised.
The barrier is rarely technical. It is often cultural. In our client work, we see the same patterns repeated:
People are reluctant to escalate for fear of consequences.
Managers delay escalation in the hope of resolving issues themselves.
Escalation thresholds exist on paper but are not applied in practice.
The result is what we describe as the “silence risk” — problems that remain unspoken until they become crises.
This is where psychological safety matters. When employees feel safe to speak up, to challenge assumptions, and to raise early warnings without fear, escalation becomes part of the organisation’s DNA. Without it, appetite and tolerance frameworks lose their effectiveness because risks are not surfaced at the right time.
The Risk Within provides a roadmap for embedding psychological safety into risk management. It identifies critical touch points across the risk lifecycle and offers clear actions to align leadership, culture, and governance. It is designed to help risk functions integrate more deeply into the business and strengthen decision-making at every level.
Polling across risk and audit professionals reinforces this point. A majority report that risk appetite and tolerance are poorly connected to actual escalation behaviours, with ownership unclear and executive buy-in limited. This disconnect explains why frameworks often fail to shape real decisions.
The CRO’s role is to close that gap by:
Creating clear escalation thresholds linked to appetite and tolerance, so staff know when an issue must move upward.
Embedding a culture of challenge across the three lines, reinforcing that raising concerns is a sign of strength, not weakness.
Reporting cultural indicators — such as frequency of escalations, responsiveness, and speaking-up survey results — alongside risk metrics.
Boards increasingly expect this cultural lens. They want to know not only whether controls are in place, but also whether the organisation has the courage to escalate when those controls fail. For the CRO, strengthening the escalation culture is a governance imperative.
Control Effectiveness
For boards and executives, one of the most consistent questions to a Chief Risk Officer is simple: “How do we know our controls are working today?” It is not enough to demonstrate that controls were tested last quarter or rated as effective in an annual review or that 80% of tested controls lacked adequate documentation. The demand is for assurance that critical controls are reliable, efficient and responsive in real time.
In our client work, we often see organisations with well-documented control libraries but limited insight into performance drift. Controls may have been effective at design, but over time processes change, people move, and technology evolves. Without continuous monitoring, controls degrade silently, leaving exposures hidden until incidents occur.
This challenge is amplified in areas of rapid change such as digitalisation, outsourcing, and third-party reliance. Controls that look adequate in a stable environment may fail under the stress of transformation, merger integration, or crisis conditions.
In some instances, like in cyber risk, inflation of control can increase risks as flagged by Emanuel Salmona in his interview on RiskMasters (check The Future of Cybersecurity: Risk, Resilience, and Leadership with Emanuel Salmona)
The CRO’s role is to ensure that control effectiveness is treated as a core component of organisational performance. This involves:
Prioritising testing on key controls that protect the most material risks, rather than spreading resources too thin across the entire control inventory.
Embedding feedback loops so that when a control fails, lessons are quickly captured and design improved.
Integrating assurance activities — RCSA, internal audit, scenario testing, and external reviews — into a single, coherent view of effectiveness.
Linking controls to decision triggers, especially risk appetite and tolerance, so executives understand what actions are required when performance deteriorates.
Our Guiding Principles for Risk Control Design & Testing set out how to achieve this. For example:
Principle 2: Define Clear Control Objectives — every control must have a clear purpose and measurable attributes, linked to appetite and escalation thresholds.
Principle 6: Avoid Duplication and Over-Control — controls should be designed for clarity and simplicity, focusing resources on those that deliver the most meaningful risk reduction.
Principle 12: Anchor Controls to Risk Capacity and Strategic Alignment — controls must be proportionate to the organisation’s ability to bear risk, ensuring they reinforce strategic execution rather than hinder it.
👉 To see how these principles come together in practice, explore our Integrated Risk Management Pathway™. It sets out how boards and executives can align appetite, tolerance, capacity, and control design into a single framework that strengthens governance and decision-making.
In our experience, leading organisations treat control effectiveness as both a risk and performance lens. They ask: Are our controls practical? Do they reflect how the business actually operates? Are they aligned with risk appetite and capacity?
When controls are designed, tested, and refined against these principles, the CRO can give the board genuine confidence. Assurance shifts from backward-looking “tick-box” reviews to forward-looking insight: where the organisation is protected, where vulnerabilities remain, and where targeted investment is needed to sustain performance.
Operational Resilience
Few areas have climbed higher up the board agenda in recent years than operational resilience. For the Chief Risk Officer, the challenge is not only to demonstrate compliance with regulatory requirements but to embed resilience as a strategic capability.
As we explored in our article Building Operational Resilience: From Compliance to Strategic Capability, resilience must be about ensuring that the organisation can deliver its most important services through disruption, and that leadership has the confidence to act decisively when tolerances are tested.
Polling with senior risk leaders underlines why this shift matters. In a survey of 61 respondents, 43% identified people and leadership as their greatest vulnerability, while 36% highlighted technology and cyber dependencies. These results reinforce a key point: resilience failures are as much about systems and processes as they are about leadership capability, decision-making culture, and the ability to mobilise under stress.
For CROs, this means taking resilience oversight beyond compliance into three areas:
Defining what matters most — identifying critical services and setting impact tolerances that are meaningful for both regulators and customers.
Testing resilience under stress — including scenarios that combine people, leadership, and technology dependencies.
Embedding resilience into governance — ensuring that escalation thresholds, crisis triggers, and board reporting are aligned with appetite and capacity.
In our experience, organisations that succeed in this area view operational resilience as an enabler. It strengthens confidence in strategic execution, safeguards trust with regulators and stakeholders, and positions resilience as a source of competitive advantage.
Operational resilience is achieved when organisations integrate strategy, governance, and culture into a consistent framework. Boards and CROs that embed resilience into daily operations demonstrate strength, adaptability, and confidence to stakeholders.
👉 Ready to strengthen your operational resilience?
Stakeholder Confidence
A core part of the Chief Risk Officer’s mandate is to provide confidence to stakeholders that the organisation is resilient and well-governed. This extends across the boardroom, executive team, regulators, investors, auditors, and customers. Each group looks to the CRO for assurance that risks are identified, managed, and reported in a way that strengthens long-term performance.
At board level, the CRO builds trust with the CEO, CFO, and non-executive directors by presenting risk in a way that is both technically accurate and strategically meaningful. Boards value clear narratives that link risk to ambition, capacity, and performance. When this connection is established, risk oversight enhances confidence and decision-making.
Regulators and auditors seek evidence of independence, credibility, and foresight. A CRO who demonstrates these qualities reinforces the organisation’s reputation and positions the risk function as a source of assurance. Investors and customers also gain confidence from a risk function that demonstrates proactive governance and resilience.
Our client work highlights the importance of the internal environment. Trust is strongest where staff escalate issues openly, managers act promptly, and executives ensure transparent reporting to the board. CROs who actively monitor cultural indicators — such as escalation timeliness, frequency of challenge, and survey results on speaking up — are better equipped to provide boards with an authentic view of stakeholder confidence.
The CRO strengthens stakeholder confidence through three dimensions:
Internal trust — executives, staff, and boards view risk management as a credible partner.
External trust — regulatory expectations are met, and the organisation demonstrates independence and foresight.
Cultural trust — behaviours throughout the organisation support transparency, challenge, and escalation.
Human Capital and Culture Signals
People and culture are central to effective risk management. For the Chief Risk Officer, monitoring human capital signals provides early insight into risks that are not always visible through traditional metrics. These signals highlight how well the organisation is positioned to deliver on its strategy under pressure.
Key areas of focus include:
Attrition and retention — turnover in critical teams can reduce capability and create vulnerabilities in control execution and resilience.
Engagement and wellbeing — indicators of disengagement or burnout provide early warnings of operational stress.
Leadership continuity — succession planning and depth of capability at senior levels ensure stability and informed decision-making.
Culture also provides important signals. Organisations with strong speaking-up environments and visible psychological safety encourage timely escalation and challenge. Risk ownership is reinforced when incentives align with behaviours that support transparency and accountability.
The CRO role includes integrating these human and cultural indicators into board-level reporting. Surveys, HR data, training completion rates, and escalation metrics provide measurable insights into the organisation’s health. When presented alongside financial, operational, and resilience data, they create a holistic view of capacity and readiness.
Through this lens, human capital and cultural signals become part of the organisation’s risk intelligence system. They help boards and executives understand not only the effectiveness of frameworks and controls, but also the underlying conditions that determine whether those frameworks succeed in practice.
Data and Technology Risks
Data and technology form the foundation of modern risk management. For the CRO, confidence in decision-making depends on the integrity, reliability, and timeliness of the information available. Strong oversight of data and technology risks ensures that both day-to-day operations and long-term strategy are supported by trustworthy insight.
Data lineage and quality are essential areas of focus. Boards and executives require assurance that risk data can be traced from source to report, that it reflects the organisation’s actual exposures, and that it is updated in line with business changes. Weak data governance creates uncertainty in reporting and limits the effectiveness of appetite and capacity frameworks.
Artificial intelligence and advanced analytics create new opportunities for foresight, efficiency, and monitoring. At the same time, CROs must address risks related to explainability, bias, regulatory expectations, and ethical use. Oversight of AI models includes ensuring that assumptions are transparent, outputs are interpretable, and accountability is clearly defined.
Technology resilience is another priority. Dependency on critical systems and third-party platforms requires regular testing, scenario planning, and clear contingency arrangements. CROs play a key role in ensuring that technology oversight connects with operational resilience and business continuity frameworks.
Effective CRO oversight of data and technology risks includes:
Establishing clear standards for data quality, lineage, and ownership.
Integrating AI and analytics governance into risk frameworks.
Testing technology resilience against disruption scenarios.
Reporting to the board on both vulnerabilities and opportunities created by technology.
Financial and Capacity Lens
The ability to take risk depends on the resources available to support it. For the Chief Risk Officer, aligning financial and operational capacity with strategic ambition is a central responsibility. This ensures that decisions are informed by a clear understanding of what the organisation can sustain in practice.
Capital and liquidity provide the financial foundation for risk-taking. Boards rely on the CRO to demonstrate how risk appetite and tolerance are supported by adequate buffers, stress-testing results, and credible contingency plans. Transparent reporting of financial capacity strengthens decision-making and reinforces trust with regulators and investors.
Operational capacity is equally important. Human resources, systems, and processes must be aligned to the level of activity and transformation under way. CRO oversight highlights whether resources are sufficient to deliver controls, resilience testing, and change initiatives without overstretch.
Risk transfer mechanisms such as insurance, hedging, and strategic partnerships extend capacity by reducing potential impacts. CROs provide assurance that these arrangements are well designed, cost-effective, and aligned with appetite.
An integrated financial and capacity lens allows the CRO to:
Show the connection between risk appetite and the organisation’s true ability to bear risk.
Provide the board with stress-testing results that combine financial and operational dimensions.
Recommend adjustments to appetite, investment, or risk transfer strategies to maintain alignment with capacity.
This approach positions capacity as a strategic enabler. When boards understand both the resources available and the limits of those resources, they can pursue growth and transformation with greater certainty, supported by a risk framework that is realistic, transparent, and sustainable.
Foresight and Weak Signals
A defining quality of an effective Chief Risk Officer is the ability to anticipate what lies ahead. Foresight transforms risk management from a backward-looking activity into a forward-looking capability that strengthens decision-making and resilience.
Weak signals are early indicators of change that may not yet be visible in traditional reporting. These signals can include shifts in customer behaviour, new regulatory priorities, early technology adoption, or patterns of employee sentiment. Identifying and analysing these signals helps organisations prepare for risks before they escalate.
CROs cultivate foresight through multiple channels:
Horizon scanning to track geopolitical, economic, and regulatory trends.
External intelligence networks with industry bodies, regulators, and peer organisations.
Scenario planning that explores how emerging risks could evolve and interact.
Cultural listening tools such as surveys, town halls, and sentiment analysis to detect changes within the organisation.
The importance of foresight was a central theme in our RiskMasters conversation with Roger Spitz — author and futurist focused on strategic anticipation. He emphasised that organisations which systematise foresight, rather than treating it as a one-off exercise, are better prepared to navigate disruption and create long-term advantage.
In our experience, organisations with strong foresight practices embed these activities into board discussions and strategy reviews. This ensures that risk appetite and capacity are calibrated not only to current conditions but also to plausible future environments.
When CROs frame foresight in a structured way, boards gain confidence that risks are being managed proactively. Weak signals become decision triggers, and the organisation positions itself to adapt with speed and resilience.
Conclusion
The role of the Chief Risk Officer continues to expand as organisations navigate complexity, disruption, and transformation. Oversight now extends across strategic alignment, change programmes, systemic risks, interdependencies, culture, controls, resilience, stakeholder confidence, human capital, technology, financial capacity, and foresight.
Each of these dimensions reinforces the others. Appetite and capacity inform transformation oversight. Culture and escalation shape how controls and resilience perform. Data and technology strengthen foresight and board reporting. Together they form a comprehensive lens through which boards and executives can navigate uncertainty with confidence.
Our work with clients consistently shows that CROs who embrace this broader mandate create significant value. They position risk as a strategic capability, provide decision intelligence that strengthens governance, and build trust across internal and external stakeholders. They enable boards and executives to pursue ambition with clarity, supported by frameworks that are practical, proportionate, and aligned with organisational capacity.
The most effective CROs are not only guardians of frameworks but also strategic advisors, cultural shapers, and foresight leaders. They connect risk with strategy, resilience with ambition, and governance with long-term sustainability.
About the Author: Julien Haye
Managing Director of Aevitium LTD and former Chief Risk Officer with over 26 years of experience in global financial services and non-profit organisations. Known for his pragmatic, people-first approach, Julien specialises in transforming risk and compliance into strategic enablers. He is the author of The Risk Within: Cultivating Psychological Safety for Strategic Decision-Making and hosts the RiskMasters podcast, where he shares insights from risk leaders and change makers.
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