From what I gather you’d want a CRO that has a complimentary knowledge base in relevant areas of psychology alongside more standard risk analysis tools. I definitely agree with that.
Yes. A CEO is by nature an optimist, with a “can do” approach. A CRO would report to the board directly to balance this optimism. This way the board, the CEO and the company will not be blindsided by the results of poor decisions, or anything else short of black swans. Currently there is a lip service to this approach in the SEC filings under possible risks and such.
Of course, this is a rather idealistic point of view. In most public companies the board members do not share in the troubles of their company, only in its benefits, so it would be easy for them to marginalize the role of the CRO and restrict it to checking for legislative compliance only. No one likes hearing about potential problems. Besides, if the CRO brings up an issue before the board, assigns a high probability to it, but no action is taken and the risk comes to pass, the board members might be found responsible. They would never want that.
Yes. A CEO is by nature an optimist, with a “can do” approach. A CRO would report to the board directly to balance this optimism. This way the board, the CEO and the company will not be blindsided by the results of poor decisions, or anything else short of black swans. Currently there is a lip service to this approach in the SEC filings under possible risks and such.
Of course, this is a rather idealistic point of view. In most public companies the board members do not share in the troubles of their company, only in its benefits, so it would be easy for them to marginalize the role of the CRO and restrict it to checking for legislative compliance only. No one likes hearing about potential problems. Besides, if the CRO brings up an issue before the board, assigns a high probability to it, but no action is taken and the risk comes to pass, the board members might be found responsible. They would never want that.