Growth strategies depend on agile risk management

Gregg Anderson, Thomas W. Grottke
4/26/2021
Growth strategies depend on agile risk management

Your financial services company wants to grow and compete. Management’s desire to move fast and embrace aggressive growth might seem fundamentally at odds with the goals of risk management professionals. But in fact, the opposite is true.

Risk management can support growth when your management team understands the “why” behind risk mitigation efforts.

Risk management can support growth when your management team understands the “why” behind risk mitigation efforts.

Most business professionals in the banking industry believe risk and compliance teams have a valuable role and should participate in business processes. But management team members often believe that their organization’s risk management practices are cumbersome and that they can tie up valuable business resources.

Sometimes, a thriving financial services company needs its business and risk management teams to differ in opinion. If the two lines operate with a mutual respect and leadership considers differing viewpoints equally, disagreement can help an organization improve and thrive.

But too frequently, information silos and inefficient workflows create frustration between the front office and risk management professionals, leading to a breakdown in communication and potentially flawed execution of the business’s operating model.

A shared understanding of risk and reward can lead to communication breakthroughs.

A shared understanding of risk and reward can lead to communication breakthroughs.

Often, the problem comes down to language. If the business team and risk management professionals aren’t using the same vocabulary and context to describe opportunities and risks, it can be nearly impossible for the two departments to have productive discussions about effective business practices.

The relationship between these two lines of defense shouldn’t be hampered by communication issues. Both teams want the business to succeed – so how can you get everyone pulling in the same direction and sharing their relevant perspectives? The solution begins with rethinking how your risk and compliance teams communicate with the business team.

With buy-in from the business line, your risk management teams can create clear lanes for growth instead of building speed bumps.

With buy-in from the business line, your risk management teams can create clear lanes for growth instead of building speed bumps.

If you want your organization to maintain an aggressive growth trajectory, your business line needs to recognize agile risk management as a potential new technical approach that can make growth more sustainable. With buy-in and better communication from the front office, risk and compliance teams can become more practical and efficient participants in business planning and execution.

Consider the following steps to get your business and risk management teams on the right path:

  1. Think about how your first and second lines can discuss risk in common terms. Frame relevant risks and controls in the context of products, services, and business initiatives.
  2. Get your business team in the habit of engaging early with the second line and communicate known risks. The second line quickly can determine whether your organization needs improved risk mitigation strategies.
  3. Don’t roll out new products and services without first getting relevant input from the second line.
  4. Establish accountability in both the front office and the second line of defense. Accountability is not an either/or business management issue. While professionals in the first line are not responsible for everything, they should understand that risk management is critical. Likewise, risk management professionals should engage with the first line and avoid falling into a routine of simply saying “no.”

Crowe IRM-as-a-Service can help your organization capitalize on opportunities and manage the risks that come with them.

Our extensive experience helping banks, credit unions, and other financial services companies achieve integrated risk management led us to create Crowe IRM-as-a-Service. This innovative solution provides a central hub for all risk and compliance activity, and it can help small and midsize financial services organizations streamline communication between the first and second lines.

To learn more or schedule a consultation and demo, visit the webpage for Crowe IRM-as-a-Service. 

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Have questions about Crowe IRM-as-a-Service or want to improve the effectiveness of your current governance, risk, and compliance activities? Get in touch – we’d love to chat.
Gregg Anderson - Large
Gregg Anderson
Managing Director, Consulting
Thomas Grottke
Thomas W. Grottke
Managing Director, Consulting