Risk Management » Rightsizing the Risk Function

Rightsizing the Risk Function

Rightsizing the Risk Function

August 10, 2023

According to a McKinsey report, chief risk officers in the financial industry are being asked to concentrate more on efficiency after years of adding personnel to improve controls of global, multidimensional, and emerging risks. That’s a tough ask in view of inflationary pressures. Increased resources focused on organizational and regulatory pitfalls are part of the CRO’s fiduciary duties, but correct resource allocation is tricky. McKinsey surveyed CROs at more than 30 large banks about resources for their second line of defense risk function. Analysis indicates that there is nothing magic about adding more people. Research indicates that costs can be reduced significantly while increasing risk effectiveness through a well-structured risk transformation program.

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