Yesterday, I chaired a conference on enterprise risk management in São Paulo. Risk is becoming an altogether sexier subject as it dallies with digital and social networks. Firms are trying to figure out how they can seek to influence the message and contain a bad vibe in a world where everyone is a potential editor and journalist and perceptions, particularly negative ones, can spread like wildfire. Another major theme was the convergence of the roles of CFO and CRO. There are even mutterings that the two positions may one day merge into a CFRO (chief financial and risk officer).
Armando Castro, the chief marketing officer at insurance giant Zurich, emphasized just how rapidly social networks have gained influence over consumers and how difficult it is for companies to use traditional tools to deal with this new opportunity (or threat). Interestingly, he suggests that companies in Brazil may be particularly vulnerable to legal actions stemming from social network: Brazilians readily use terms that would be seen as racist and discriminatory in the Anglo-Saxon world such as ‘moreno’ (something akin to darkie). That and Brazilians’ propensity for chatting and strong opinions could be a lawyer’s field day. Compaines need policies, procedures and dedicated teams to check what’s being said about the brand, monitor for defamation and leaks from employee use of social networks, he suggests. Even so, no-one seemed supremely confident that they can greatly influence new media.
Alvaro Azevedo discussed how the CFO must increasingly oversee and take responsibilty for the work of the CRO. The two positions already overlap substantially and that convergence in roles is growing, he noted. This is a natural function of the growing centrality of risk awareness and mitigation, especially in the financial sector, and the recognition that growth has to be balanced with safety hence the greater use of return on risk capital as a benchmark. This converegence can cause CFOs and CROs to step on each other’s toes and creates some tensions, he admits. That’s especially the case where very clear definitions regarding who does what are not in place. The situation is likely to get worse before it gets better.