INTRODUCTION
Second Line Advisors conducted a 2021 update of research and analysis on today’s Chief Risk Officers from the top US bank holding companies (>$50B in total assets) and the top publicly-traded FinTechs to identify trends on talent and profile.
BANKING: CHIEF RISK OFFICERS
KEY TAKEAWAYS FROM TOP U.S. BANK HOLDING COMPANIES
Tenure:
Overall Experience & Previous Position:
External Appointments:
Women in the Seat: I
KEY TAKEAWAYS FROM TOP U.S. BANK HOLDING COMPANIES
- Tenure: The average tenure of the CRO in 2021 was 4.5 years.
- Overall Experience & Previous Position: In 2021, backgrounds of CROs remaining largely similar to past years, with nearly 60% of CROs’ overall experience being in risk. In addition, nearly 50% of CROs in 2021 came into the role straight from another risk position.
- External Appointments: Only 33% of CROs were externally appointed in 2021. This ratio has remained the same over the last five years, demonstrating continued lack of flexibility in hiring from outside of the bank for the Chief Risk Officer position.
- Women in the Seat: n 2021, only 16% of CROs at the top U.S. bank holding companies are female. Over the last five years, there has been insignificant change in the progress of females in the CRO seat. There remains much room for improvement, as demonstrated by chart X.
CRO Gender Breakdown at Top U.S. Bank HCs in 2021
% of Female CROs Over Last 5 Years
Top U.S. Bank HCs CRO Previous Position in 2021
NEW CRO HIRES IN 2021
In 2021, only 27% of newly hired CROs were appointed externally to the role. There was a 22% turnover rate of Chief Risk Officers at the top U.S. bank holding companies, however there were zero new female Chief Risk Officers hired in 2021. 55% of new CRO hires came directly out of a risk position either internally or from another bank, with 67% of those hires having overall experience in risk. Outside of risk, new CRO hires were most likely to come out of legal followed by credit and compliance.
FINTECH: CHIEF RISK OFFICERS
KEY TAKEAWAYS FROM TOP FINTECHS
- Overall Experience & Previous Position: The majority of CROs at the top FinTechs in 2021 have an overall experience profile in risk management, followed by compliance. The previous positions of CROs currently in the seat span across risk first and foremost, followed by internal audit, and compliance.
- External Appointments: 60% of CROs at the top FinTechs in 2021 were externally appointed. If not internally appointed, all of the CROs at top FinTechs came into the role from another technology or FinTech company. This demonstrates a clear need for these individuals to understand the business from a similar previous perspective.
- Women in the Seat: 30% of CROs at the top FinTechs in 2021 are female.
CONCLUSION
While there are many FinTechs which have begun to appoint Chief Risk Officers, many of these are public companies. Private, and often smaller, FinTech companies generally do not yet have built out Risk functions or designated Chief Risk Officers in the way that compliance functions and CCOs have become a main priority across the board for all FinTech companies.
