The Role of the Risk Function: Your Secret Weapon for Growth

Let’s face it—most people hear “risk management” and think of it as the fun police, throwing a wet blanket over innovation. But here’s the kicker: done right, risk management can actually fuel growth and give your company a massive edge. Yes, really! The truth is, your risk function could be the unsung hero you’ve been overlooking.

The WEF Chief Risk Officers Outlook 2024 report is packed with insights, and guess what? 95% of Chief Risk Officers (CROs) agree that a well-oiled risk function gives you a serious competitive advantage. So, if your risk team isn’t sitting at the strategy table, you might be leaving money on the table. Let’s break it down and see how you can turn your risk function into a growth engine.

1. Turn Risk Into a Green Light for Innovation

Risk management gets a bad rap for being the department of “No.” But what if it was the department of “Yes, and here’s how”? The smartest companies are bringing in their risk team right from the get-go to sniff out potential issues early—and then tackle them head-on. According to the WEF report, 81% of CROs are focused on short-term innovation. Want to know the secret? Get risk involved from the start.

• Example: Let’s say you're rolling out a shiny new AI-powered product. Get the risk team to check off the regulatory boxes and flag any privacy issues before they blow up in your face.
• Quick Win: Hold monthly innovation pow-wows where the risk team works side by side with product development. It’s way easier to fix problems early than to clean up a mess later.

2. Make Cybersecurity Sexy

“Cyber risk” isn’t exactly a phrase that gets people excited. But here’s the thing: rock-solid cybersecurity doesn’t just protect you—it attracts customers. In today’s digital world, 71% of CROs say cyber risk is a serious concern. Why not flip the script and make your cyber resilience a selling point?

• Example: A retail business doubling down on e-commerce can use robust data security to woo customers. It’s simple: people will shop where they feel safe.
• Quick Win: Run a security check-up on your systems and beef up your defenses. You know what’s sexy? Being the company that never leaks customer data.

3. Embed Risk in Strategic Decisions (No More Afterthoughts)

Too often, risk management gets bolted on as an afterthought. But here’s a mind-blowing stat: 62% of CROs say they’re already in on the decision-making process for new market entries. Imagine the next level of success if your risk team was always plugged in at the strategy level.

• Example: Expanding into a new market like Latin America? Have your risk team assess the political and economic landscape before anyone hops on a plane.
• Quick Win: Get a risk heat map on the agenda for your next board meeting. Not only will you look super prepared, but you’ll also avoid those “oops, we didn’t think of that” moments.

4. Stay Ahead of Regulatory Changes (Without Losing Sleep)

Regulations—they’re everywhere, and they’re changing fast. Think of AI rules, sustainability mandates, or data privacy laws. 67% of CROs flagged this as a major headache. But here’s the flip side: companies that stay ahead of the regulatory game can use it to crush the competition.

• Example: A tech company can turn the new EU AI Act into a growth lever by being the first to comply, boosting trust with customers and partners.
• Quick Win: Set up a 30-day regulatory gap analysis. You’ll be ahead of the curve before your competitors even wake up.

5. Get Ready for Political Fireworks

Politics can throw a wrench in even the best-laid plans. 43% of CROs are more worried about political regime changes in 2024 than they were last year. Spoiler: it’s not going to get any easier. From elections to trade wars, you need to be on your toes.

• Example: A multinational business can’t afford to ignore geopolitical risks. Have a risk team track elections or unrest in key markets like the Middle East, where 84% of CROs expect continued volatility.
• Quick Win: Set up a simple weekly alert system to flag political shifts. It’s like having a crystal ball for your business decisions.

6. Balance Quick Wins with Long-Term Gains

Sure, inflation is all anyone’s talking about right now, but what about those long-term risks that could sneak up on you, like climate change? 29% of CROs are worried about human capital issues—don’t get stuck solving only today’s problems and forgetting about tomorrow’s.

• Example: Your logistics company can hedge against immediate supply chain risks while also building a long-term climate resilience strategy.
• Quick Win: Hold a long-term risk planning workshop—think of it as a crystal ball session where you map out tomorrow’s risks today.

7. Collaborate with Leadership (Not Just Sit in the Background)

If your risk team isn’t at the decision-making table, you’re missing a trick. The WEF report shows 76% of CROs feel their role is valued by leadership. But don’t stop there. Make sure your risk team isn’t just consulted—they need to be part of the core strategy.

• Example: A logistics firm expanding into volatile regions should have the CRO in every high-level meeting to prevent nasty surprises down the road.
• Quick Win: Schedule quarterly alignment meetings between the CEO and CRO. It’s where the magic happens, and your risk insights get woven into the fabric of business strategy.

8. Turn Cyber Threats Into Business Opportunities

Cybersecurity isn’t just about defense—it’s a secret weapon. With the rise of AI-driven attacks, the average cost of a data breach hit $4.45 million in 2023. Don’t be part of that statistic. Flip the narrative and use your resilience as a trust builder.

• Example: A financial firm can position itself as the place for secure transactions, using cybersecurity as a market differentiator.
• Quick Win: Roll out AI-powered threat detection tools. Not only will it keep you safe, but it’ll also make you look like the business that’s got it all under control.

9. Don’t Sleep on Talent Risk

It’s a dog-eat-dog world when it comes to top talent, and 29% of CROs say human capital risks are a big deal. Retaining critical talent and building a resilient workforce needs to be front and center—your risk team should be all over this.

• Example: A tech firm short on skilled engineers can use risk management to identify potential talent gaps and deploy strategies to keep them happy.
• Quick Win: Get HR and risk talking. If talent risks aren’t in your ERM framework, you’re already behind the game.

10. Build a Risk-Aware Culture That Rocks

Risk management isn’t just for the boardroom—it’s for everyone. Imagine a culture where every single employee knows how to spot risks and takes action before something blows up. That’s how you win. 52% of CROs agree that effective risk management offers a serious competitive edge.

• Example: A manufacturing company can empower its workforce to flag potential safety hazards before they become costly incidents.
• Quick Win: Host a company-wide risk-awareness week—make it fun, throw in some incentives, and watch your employees turn into risk rockstars.

The Bottom Line: Risk is Your Superpower

Let’s flip the script: risk isn’t something to dread. It’s your secret weapon for growth, innovation, and staying ahead of the competition. The WEF 2024 Chief Risk Officers Outlook proves that companies who embrace risk management don’t just survive—they thrive.

Key Takeaways:

• Risk management should be in the driver’s seat for innovation, not an afterthought.
• Cybersecurity isn’t just a shield—it’s a trust builder that can drive business.
• Be proactive with regulations, and turn compliance into a competitive edge.
• Stay agile and plan for both short-term and long-term risks.
• Create a culture where every employee is empowered to manage risk.

Ready to Turn Your Risk Function into a Growth Powerhouse?

At Arischio Consulting, we specialize in transforming risk management from a compliance exercise into a strategic growth driver. Whether it’s helping you navigate complex regulations, beefing up your cybersecurity defenses, or embedding risk into your innovation strategy, we’ve got you covered.

Let’s talk about how we can help you turn risk into your competitive advantage.

Visit Arischio Consulting today to discover how we can tailor our risk solutions to your business needs. With our expertise, your risk function won’t just protect—it will propel your business forward.

Contact us today and let’s get started!