Today’s risk functions face off against a laundry list of challenges, sandwiched between regulatory pressures, geopolitical turmoil, and a technological revolution (to name a few).

As tech transformation takes center stage (to varying degrees of success) firms are scrambling to modernize their approach to risk.

The foundations of effective risk management are changing, and as spending increases alongside it, difficult questions must be asked of leaders.

Do you have a healthy risk culture? Does your board have the right oversight? Are you equipped to protect against cyber threats?

While the big push for tech enablement is underway, well-balanced risk management takes more than hard skills.

Contrary to a common misconception, soft skills play a starring role in any resilient and adaptable risk culture. The risk recruitment specialists at Broadgate explore in more detail below.

Getting Buy-in from the Board – Stakeholder Management

Across the nation, streamlined budgets and skill shortages are reshaping firms’ approaches to operational management.

There’s been a noticeable shift toward value creation in the back and middle-office functions, which includes risk, a function that’s often seen to create friction at the decision-making level – historically, they tend to get viewed as a cost center (like cybersecurity) that focuses on limiting, rather than driving growth.

In today’s value-focused area, risk and compliance professionals need to know how to articulate the worth of the function beyond a safety lens.

Breaking down the us vs them mentality takes a versatile set of soft skills. Stakeholder management signifies some incredible additions to the risk officer’s skill set, including the ability to:

  • Break down siloed work across departments
  • Quantify risk in business terms
  • Bridge the communication gap between functions
  • Develop a stronger relationship with the regulator

 

Example:

A Chief Risk Officer (CRO) presents to the board, recognizing that key decision-makers see the function as a cost center rather than a value driver. Instead of concentrating solely on regulatory compliance, the CRO reframes the discussion by demonstrating how proactive risk strategies have prevented financial losses, safeguarded the brand's reputation, and facilitated safe expansion into new markets. By connecting risk management to business growth and resilience, the CRO secures increased investment in the function, ensuring it remains a strategic priority.

Seeing Beyond the Data – Critical Thinking

In risk management, an overreliance on automation or the raw data output of systems will likely slow down processes when it’s not necessary, sacrificing time, money, and efficiency.

Risk professionals must challenge assumptions and make informed decisions in complex situations. Often, that means thinking critically, beyond what the data might suggest.

Example:

A firm identifies unusual transaction patterns flagged by its AI system. Instead of acting on these automated alerts, a risk analyst uses critical thinking to assess the situation– the analyst realizes that the transactions are connected to a legitimate business expansion. This insight helps avoid unnecessary account freezes, preserving client trust while ensuring compliance with regulations.

Forward Planning – Problem-Solving

Regulators are looking for components of trust. They want to find confidence in boards and their ability to demonstrate forward thinking. You’ll struggle to find this confidence when key points are submerged in the back pages of board reports – are the messages clear? Are key decision-makers empowered to push back against arbitrary reporting?

A well-prepared risk function ensures that forward thinking is a crucial driver of strategic decision-making. This involves identifying emerging risks and translating them into clear, actionable insights that boards and regulators can engage with.

Strong strategic thinking and proactive problem-solving are essential; without these qualities, risk functions may become reactive instead of serving as a driving force for resilience and growth.

Example:

A Head of Compliance prepares a board report that not only outlines past incidents but also highlights emerging regulatory changes, geopolitical risks, and potential supply chain disruptions. Rather than simply reacting to changes, the CRO presents data-driven forecasts and proposes proactive mitigation strategies. This forward-thinking approach reassures regulators that risks are being managed strategically and builds trust with leadership by positioning the risk management function as a business enabler rather than just a compliance requirement.

Targeting Talent

Firms that can bring on technical talent with a strong foundation of soft skills are well-positioned to develop adaptable risk management functions in a fast-changing environment. This is easier said than done, with compliance officers and risk managers being among the most in-demand roles in financial services.

What’s your take? Are soft skills more important than ever? How’s your risk function evolving?

I'd love to hear from anyone in the process of building out their risk management capabilities - if you'd like any hiring support or market advice, please feel free to contact me directly at [email protected].