Explanation:
Evidence indicates that having a CRO helps upper-level management make more informed decisions that better incorporate risk factors. Having three separate individuals also appears to solve a plethora of potential conflicts, as well as providing an opportunity for diverse thought in the risk management and decision-making process.
(Book 1, Module 3.1, LO 3.b)
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Question 62
An MBA graduate from a highly ranked university has recently been hired at Risk Governance Associates (RGA). His primary duties are to combine recent academic research and professional best practices when making recommendations for RGA's financial institution clients. One of RGA's clients has been asking for his assistance with determining the efficacy of adding a Chief Risk Officer (CRO) position to the management team, as well as separating the CEO and chairman positions. Which of the following should he consider as a primary determinant when making his recommendations to RGA?
A
Familial connections between the managerial and board ranks.
B
A single person with a strong will and determination for RGA financial success recommended for all three positions.
C
A CRO to help map risks to managerial decisions, but maintain a single person as CEO and chairman.
D
Three different individuals for the CRO, CEO, and chairman positions to maintain independence as well as checks and balances for each functional activity.
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