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

C E O / E x e c u t i v e Te a m

F i n a n c e

R i s k Te a m

Te c h / I T

Data

DATA

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

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Po

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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

Technical Skills Are No Longer Enough O

rg

an

iz

at

io

na

l

L

ev

el

T i m e

Technical Expertise

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

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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

How to take Leadership Signature

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®