Explanation:
The CRO will most likely be faced with an immediate challenge in the form of a conflict between the existing risk professionals within the business units and the other new employees working within the new ERM function. In particular, the seasoned staff may be reluctant initially to change working procedures or even relinquish certain roles. A practical way of solving such a conflict may involve the alignment of incentives/bonuses to fit the two groups in a ‘wholesome’ way.
Option A is incorrect: A harsh welcome may be experienced, but it is not a challenge directly linked to the development of the ERM framework.
Option B is incorrect: The CRO having knowledge in ERM, will not face difficulties in developing a robust framework and understanding the companies objectives and models.
Option D is incorrect: Same explanation for B applies here.
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Q.93 A life insurance company recruits a chief risk officer to develop an ERM framework and oversee its implementation and maintenance. Previously, the company has always had a "silo" approach to risk management and has risk management professionals embedded within business units. Which of the following presents an immediate challenge the newly appointed CRO is most likely to face?
A
A raucous welcome by other executives such as the CFO and the CEO.
B
Developing a robust ERM framework.
C
A conflict between the ERM function staff and risk professionals embedded within business units.
D
Difficulties understanding the company's objectives and business model.