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The Role of
Leadership Style in
Risk Management
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Paul Gibson
Paul is a Partner at Heidrick & Struggles and a member of the Global Financial Services Practice. He leads the Financial Services Infrastructure Sector and the Consumer Financial Services business in the Americas and is a functional expert within the Legal, Risk & Compliance Practice.
Paul joined Heidrick & Struggles in 2007 with seven years of prior talent acquisition experience in London, initially for a boutique recruiting firm and latterly internally for one of Europe’s largest consumer and services companies. During those years he covered diverse functional roles including finance, tax, treasury, human resources, marketing, corporate development and operations.
Paul graduated with a Bachelors Degree in European Languages & Business from Leeds Metropolitan University where he studied French and Italian and spent one year abroad in Brussels.
Ryan Pastrovich
Ryan Pastrovich is a Data Analytics Consultant within Heidrick & Struggles’ Enterprise Product Group. In his current role, Ryan spearheads the quantitative aspects of Heidrick’s suite of proprietary and third-party assessment tools, focusing on the description and prediction of executive leadership competencies, styles and tendencies, with the goal of developing effectiveness at the leader, team, and organizational levels.
Previously, Ryan was a consultant within Heidrick’s Leadership Consulting Practice. In that role, he specialized in leadership assessment, succession planning, management team effectiveness, and performance analytics. He has advised hundreds of high-level executives and executive teams globally. He joined Heidrick in 2003 as a researcher in its CEO & Board of Directors Practice.
Ryan received his Master of Science in Analytics from University of Chicago and holds a Postgraduate Diploma in Organizational Leadership from Saïd Business School, University of Oxford and a Bachelor of Science in Journalism from Northwestern University.
Additionally, he is a member of the American Statistical Association and Association for Research in Personality. He holds certifications in the Hogan Assessment Systems (HPI, HDS, MVPI) and Saville Consulting assessments (Wave, Swift).
Christopher Van Buren
Christopher Van Buren, CFA, currently serves as Chief Risk Officer, Financial Risk, at TIAA. Mr. Van Buren joined TIAA in 2014 as Chief Risk Officer, TIAA Asset Management.
Before joining TIAA, Mr. Van Buren was Chief Risk Officer for UBS Global Asset Management. Prior to that, he served as Head of Risk Management and Operations for the Investment Office at The Rockefeller Foundation as well as Global Head of Risk Management for the Investment Management Division of Lehman Brothers. Mr. Van Buren held a variety of positions in sell-side fixed income research, asset manager portfolio management and risk management during a 15-year career at Goldman Sachs.
Early in his career, he worked as a flight systems software engineer.
Mr. Van Buren holds a B.S.E. in Electrical Engineering/Computer Science from Princeton University, and an M.E. in Electrical Engineering from Stevens Institute of Technology. Mr. Van Buren is a CFA Charterholder and a member of the GARP Buy-Side Risk Managers’ Forum.
What We See In the Market
D a t a P r o d u c e r s
►Focus on analysing and reporting complex information. Able to produce large quantities of data and reports but unable to change the business behavior with this information.
P r o c e s s M a n a g e r s
►Focus on processes and risk minimisation. Highly efficient and able to get information in front of key constituents rapidly.
B u s i n e s s P a r t n e r s
►Provide decision support and sound risk analysis to management for making trading, financial and operating decisions.
V a l u e M a n a g e r s
►An integral part of management team to support value/wealth creation by identifying opportunities, providing critical information and analysis to make superior operating & strategic decisions.
The Evolving Risk Perspective
Q u e s t i o n e v e r y t h i n g
I m p e d i m e n t t o
p r o g r e s s
E v e n t d r i v e n
R e a c t i v e
P r o t e c t i o n
F e a r
C h e c k l i s t
R i s k a w a r e
C o n s i d e r e v e r y t h i n g
B u s i n e s s a c c e l e r a t o r
P r e c i s i o n , a n a l y t i c s ,
r i g o r, s m a r t s
P r o a c t i v e , i n n o v a t i v e
M i s s i o n d r i v e n
C o n f i d e n c e
S u c c e s s
R i s k a g i l e
The old risk perspective The new risk perspective
Risk Key Constituencies
Risk Key
Constituencies
Board of Directors
CEO
Shareholders
Clients
Business Line Leadership
Other Control Functions (i.e. Finance, HR,
Legal & Audit)
Company Employees
Regulators
Regional Leadership
Risk Employees Suppliers
Press & Media
Ratings Agencies
Government
Main Street
There are multiple stakeholders to consider
What Did We Do?
Leveraged our Leadership Signature® tool, which identifies an individual’s preferred
leadership style, especially in Volatile, Uncertain, Complex and Ambiguous settings
Leadership Signature®
data Compiled and analyzed
We surveyed top risk
executives across the globe
The World we live in today VUCA (Volatility, Uncertainty, Complexity, and Ambiguity)
-
Ho
w w
ell
can
yo
u p
red
ict
the
re
sult
s o
f yo
ur
act
ion
s?
+
- How much do you know about the situation? +
Complexity
Ambiguity
Volatility
Uncertainty
Characteristics
The situation has many interconnected parts and variables. Some information is
available or can be predicted, but the volume or nature of it can be overwhelming
to process.
Example:
You are doing business in many countries, all with unique regulatory
environments, tariffs and cultural values.
Approach:
Restructure, bring on or develop specialists, and build up resources adequate to
address the complexity.
Characteristics
The challenge is unexpected or unstable and may be of unknown duration, but it’s
not necessarily hard to understand; knowledge about it is often available.
Example:
Prices fluctuate after a natural disaster takes a supplier off-line.
Approach:
Build in slack and devote resources to preparedness – for instance, stockpile
inventory. These steps are typically expensive; your investment should match this
risk.
Characteristics
Casual relationships are completely unclear. No precedents exist; you face
“unknown unknowns”.
Example:
You decide to move into immature or emerging markets or to launch products
outside your core competencies.
Approach:
Experiment. Understanding cause and effect requires generating hypotheses and
testing them. Design your experiments so that lessons can be broadly applied.
Characteristics
Despite a lack of other information, the event’s basic cause and effect are known.
Change is possible but not a given.
Example:
A competitor’s impending product launch muddies the future of the business
market.
Approach:
Invest in information – collect, interpret, and share it. This works best in
conjunction with structural changes, such as adding information analysis
networks, that can reduce ongoing uncertainty.
*Harvard Business Review, Bennett and Lemoine, January–February 2014.
A framework* to understand the dynamics of the current operating environment
Leadership Signature® – The Eight Styles
Leadership Signature® provides insight into how an individual is likely to behave in leadership roles, a key factor in determining the best candidate for the position.
Core Characteristics Areas for Heightened Awareness Paradox to Manage
Collaborator
Composer
Energizer
Forecaster
Harmonizer
Pilot
Producer
Provider
Developing others, teambuilding, empathy, attracts talent
Independence, creativity, problem solving, decisiveness, self-reliant
Charismatic, inspiring, connects emotionally, provides meaning
Depth and breadth of knowledge, anticipatory, conceptual thinking
Creates positive, stable environments, reliable, diligent, spots inconsistencies
Strategic vision, managing complexity, team-building, clear POV
Execution and task-focused, linear thinking, structured, loyal to tradition
Intellectually confident, operates with conviction, driven to provide for others
Setting direction, addressing conflict, organizational visibility
Team-building, establishing relationships, communication
Consider dissenting POVs, accepting variation, demonstrating patience
Tolerance for risk outside expertise, shifting perspectives once formed, translating vision for others
Change orientation, comfort with ambiguity, versatility
Appreciating how things worked before, work-life balance, detail orientation
Agility, connecting emotionally, accepting of alternative methodologies, creativity
Listening to others, flexibility, forging personal relationships, daily operations
May promote the careers of others at the expense of their own
May not secure the support required to build their great ideas
Clear POV and personal charisma may prevent healthy dissent
May need to be encouraged to act on their great ideas with more pace
May resist the change that is often necessary for a stable future
POV and comfort with ambiguity may cause change without adequate support
Drive for effective efficiency may inhibit creativity / innovation
Deep self-confidence provides a path but limits collaboration
Leadership Signature® – The Eight Styles
Self-Reliant Problem Solving
Group-Reliant Problem Solving
Pre
sen
t Ex
celle
nce
Futu
re Excelle
nce
Collaborator
Harmonizer
Provider
Provider
Producer
Pilot
Energizer
Forecaster
Composer
Risk Executives Must Influence a Disparate Group of
Stakeholders G R O U P S C O R E A V E R A G E S , I N R E L A T I O N T O
P O P U L A T I O N A V E R A G E
Risk Executives
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
Harmonizer Composer Energizer Producer Collaborator Forecaster Pilot Provider
Sco
re D
iffe
ren
ce f
rom
Po
pu
lati
on
Ave
rage
Leadership Signature Style
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
Harmonizer Composer Energizer Producer Collaborator Forecaster Pilot Provider
Sco
re D
iffe
ren
ce f
rom
Po
pu
lati
on
Ave
rage
Leadership Signature Style
Risk Executives Must Influence a Disparate Group of
Stakeholders
CEO
CEO
CFO
Engineering/ Tech
Finance Below C-Level
G R O U P S C O R E A V E R A G E S , I N R E L A T I O N T O P O P U L A T I O N A V E R A G E
Risk Executives
At Higher Levels, “Being Right” Gives Way to Influencing
-12%
-5%
3%
1%
-9%
-12% -15%
-10%
-5%
0%
5%
10%
2 levels 1 level None, I'm it
Sco
re D
iffe
ren
ce f
rom
Po
pu
lati
on
Ave
rage
Level Below Highest-Ranking Risk Executive Collaborator
Pilot
C O L L A B O R A T O R A N D P I L O T S C O R E S , B Y L E V E L – G A R P P A R T I C I P A N T S
Global Association of Risk Professionals 111 Town Square Place 14th Floor Jersey City, New Jersey 07310 U.S.A. + 1 201.719.7210 2nd Floor Bengal Wing 9A Devonshire Square London, EC2M 4YN U.K. + 44 (0) 20 7397 9630 www.garp.org
© 2015 Global Association of Risk Professionals. All rights reserved.
About GARP | The Global Association of Risk Professionals (GARP) is a not-for-profit global membership organization dedicated to preparing professionals and organizations to make better informed risk decisions. Membership represents over 150,000 risk management practitioners and researchers from banks, investment management firms, government agencies, academic institutions, and corporations from more than 195 countries and territories. GARP administers the Financial Risk Manager (FRM®) and the Energy Risk Professional (ERP®) exams; certifications recognized by risk professionals worldwide. GARP also helps advance the role of risk management via comprehensive professional education and training for professionals of all levels. www.garp.org
Creating a culture of risk awareness®
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