Navigating Risk in a Complex World: Unravelling the Dynamics of CRO Appointments in Insurance

In the post-2008 financial crisis era, the role of the Chief Risk Officer (CRO) in the insurance industry has transformed, necessitating diverse skill sets, global perspectives, long-term strategic thinking, and robust leadership. This article takes an in-depth look at the appointment and role of Group CROs from 2010 up until 2022, analysing data from 34 publicly listed insurance companies across three continents. Our goal is to decode the critical aspects of risk management leadership, tracing significant trends that have emerged over the past 14 years, and offering a comprehensive picture of the qualifications, career trajectories, and backgrounds that enable CROs to navigate the complex risk landscape of today's insurance industry.

The diverse professional backgrounds of CROs, with only 40% being actuaries, underscores the need for a wide array of skills to address the multifaceted nature of risks in today's landscape.

The fact that CROs typically have 12 years of significant leadership experience highlights the evolution of the CRO role from primarily technical to a strategic one that influences company-wide risk culture and decision-making.

The global scope of risk management is evident in that 55% of Group CROs relocated for their positions, showing the strategic importance companies place on this role and their readiness to seek talent beyond local markets.

Key Findings

1. A significant 40% of Chief Risk Officer (CRO) appointments are qualified actuaries, emphasising the importance of actuarial expertise. However, the 60% of CROs from other backgrounds indicate a need for diverse skills to manage complex risks, including strategic, operational, legal, and reputational risks.
2. The fact that 55% of Group CROs relocated for their positions reflects a global search for talent, highlighting the CRO's pivotal role and the readiness of companies to invest substantially to secure top talent.
3. With an average of 26 years of experience and just two major career moves, Group CROs tend to exhibit both stability and a breadth of experience. This blend is crucial for deep industry knowledge and continuity, coupled with innovation from varied experiences.
4. Group CROs' average tenure of 6 years underlines the preference for stability and continuity in leadership. This timeframe allows strategic impacts, effective response to regulatory changes, and succession planning.
5. Group CROs' average of 12 years of significant leadership experience underscores the evolving CRO role into a more strategic one, requiring leadership skills in addition to risk management expertise.

Key Takeaways:

1. Diverse Skill Sets: The CRO role now requires diverse skills, including understanding broader business, legal, strategic, and reputational risks.
2. Global Talent Pool: Companies' willingness to relocate CROs indicates a broad, global search for talent and the role's importance and complexity.
3. Experience and Stability: Long tenures and few significant career moves characterize successful CROs, highlighting the value of experience and stability.
4. Strategic Importance: The CRO role has high strategic importance, necessitating strong leadership skills, and allowing for strategic impact and effective succession planning.
5. Leadership and Influence: The emphasis on leadership experience for CROs reflects their influence on company-wide risk culture, strategic direction, and interactions with external stakeholders.

These trends suggest that the CRO role in the insurance industry is diversifying and becoming more strategic and globally oriented. Post the 2008 financial crisis, companies are broadening their expectations for CROs, requiring not only deep actuarial knowledge but also wider business acumen, leadership skills, and the ability to manage a broad range of risks. This trend towards a more diverse skill set could impact future recruitment and training within the industry. Stability and long tenure are valued, indicating the importance of in-depth knowledge and continuity for effective risk management. However, successful CROs also possess significant leadership experience, showing that developing leadership skills is equally important. Overall, these trends point to a shift in the insurance industry towards recognising the strategic importance of the CRO role and the value of diverse experience and strong leadership.

Damhurst is an Executive Search firm, 100% focussed on the insurance industry. We operate across seven key functional practices; Broking & Underwriting, Board & NEDs, Finance, Operations, Risk Management & Corporate Governance, Talent & HR and Technology. Contact us today to learn how our expertise can assist your company in developing powerful leadership strategies, cultivating a diverse and adaptive team, and staying competitive in this challenging environment.