The risk management function has grown in importance and scope in recent years. As our Global Risk Management Study 2021 revealed, eight out of ten risk managers state that their teams spend significantly more time on value-adding activities such as product advice or the evaluation of new business models than they did two years ago. However, the same proportion of these people also indicates that the balance between existing tasks and value-adding activities is a great challenge. Risk management is confronted with capacity bottlenecks and an overload of important priorities, especially as the business environment is becoming more complex and new risks emerge.

Since their primary responsibility remains to protect the business while battling the accelerating pace of change, the risk function must focus its efforts on a limited number of truly critical growth initiatives across the organization. The first step is to work with the C-suite to identify the top growth initiatives that matter most to the business. Once the priorities are set, the risk should ensure that it has the necessary funding and capacity to help the company successfully meet those priorities.

When risk is involved in company-wide growth and transformation initiatives – be it expanding into a new geographic market, a significant investment in new technology, or a new product offering – it is important to ensure that the “risk view” is effectively communicated and understood.

To do this, the risk function must:

1. Remain independent and believable – you can’t fall overly in love with the positives,

2. Use the best available technology, including modeling and analysis, to bring quality data and insights to the table,

3. Make balanced recommendations based on such data and experience,

4. Make sure the bigger picture of risk-sharing is understood as part of the assessment – that is, talking about more than just cutting or avoiding costs.

These steps are necessary, but they alone are not enough to be successful in a complex and rapidly changing environment. The risk function must also recognize the importance of relationships, not just with traditional allies like finance, IT and data security, but also with the front office and teams that run businesses. In our Global Risk Study, risk managers cited P&L owners and the front office as the parts of the business they need to develop closer relationships with.