Horst Simon describes himself on LinkedIn in a challenging way:
Transformational Nonconformist – It is time to Think Differently about Risk; Transformative change requires Disruption!!
I like that!
His primary description is as a “Risk Culture Builder”.
A while ago, he wrote an interesting piece, Calling all Risk Culture Experts. In it he says, and I agree, “we suddenly find a whole bunch of Risk Culture ‘Experts’ talking absolute garbage”.
The trouble is that while I agree a great deal with Horst, I am not 100% with him on this.
He says:
Let us get the basics right:
Basics No 1: Governance structure: Firstly, the reporting line for the Head of Risk/ Chief Risk Officer is directly to the Board. If you run your business by Committees, that would be the Chairperson of the Board Risk Committee; if not, it should be a Non-executive Director who knows something about the management of risk.
If you want to ensure that there is tension and more, even conflict, between the Chief Risk Officer (CRO) and management, emphasize the independence of the CRO. Make it clear that the CRO is the sheriff appointed to ensure the cowboys in management don’t take too much risk.
But if you want to promote effective management, de-emphasize independence and have the CRO report to the CEO with access to the board. Then…
