The role of the risk function is changing, and risk professionals need to make sure they are equipped with the right set of future-proofed skills. Andy Banks explains.
Organisations are reappraising the skill sets of risk professionals as they reposition the risk function to adapt to new organisational structures and tech-driven strategies.
This represents a fundamental shift away from the traditional approach to risk management, which often focused on established risks, to a more predictive and integrated approach.
In this environment, we are seeing a growing emphasis on new skill sets for risk professionals —digital affinity, innovation, agility, and communication, for example, alongside a greater focus on strategy, client needs and holistic thinking.
At the same time, analytics and data science teams are beginning to emerge within risk functions. This means that risk professionals now also need data analysis skills and a greater focus on predictive digital models.
Growth of specialist teams
The greatest threats facing the risk function today are coming from non-financial sources, feeding demand for more specialists with niche knowledge.
Despite this, specialist teams currently account for just six percent of the risk function on average.
Although climate change was seen as the top threat facing banks in a recent PwC survey, climate change specialists account for, on average, just 0.51 percent of risk teams.
While operational resilience is high on the agenda for regulators, meanwhile, most risk teams have just one operational resilience specialist for every 100 risk professionals.
Acquiring new skillsets
Successful transformation requires the right leaders, behaviours, data, tools, and incentives. Here are five steps organisations can take to acquire the skills needed for the risk management function of the future.
1. Strengthen the risk function with a diverse range of skills
In a fast-moving, uncertain environment with a changing risk profile, the risk function must have a range of multi-skilled and senior risk professionals. There is a strong emphasis on individual skills such as holistic thinking, storytelling, and digital affinity.
2. Close the digital skills gap
As well as developing their soft skills, risk professionals need to improve their digital skills continually as a data-driven and visualisation approach is essential for managing and reporting risk today.
This will enable risk professionals to focus their time and attention on analysing, interpreting and visualising data and ultimately provide value.
Combining data analytics with human knowledge will provide in-depth insights into trends and changes in risk and generate higher levels of precision and greater risk coverage.
3. Reshape the risk function to meet the greatest threats
With the rising focus on non-financial risks such as cybersecurity, climate change and operational resilience, specialist skills are essential. Building teams with diverse skills will encourage diverse thinking and lead to better decision-making.
Specialist risk professionals can be ‘found and made’ through recruitment, upskilling, and on-the-job training.
4. Create a culture of continuous learning
Staff will need to be supported through this period of change ahead as ways of working evolve and become more tech-enabled.
Ongoing training and development will be crucial to driving the transformation agenda and upskilling the risk function, not least in data analytics.
Employees who see their organisation investing in their long-term development will be more likely to trust leaders and feel engaged and valued.
5. Monitor risk function skills continually
It is vital to continuously monitor your risk function's skillset and headcount to ensure that the team is equipped with the skills, seniority and expertise to manage new and emerging risks.
Importantly, as the digital agenda grows, risk function leaders should utilise data analytics to predict skills gaps and upskill.
Andy Banks is Partner in Risk Advisory Services at PwC.
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