COMPETENCY PROFILING IN A BANKING INDUSTRY …...COMPETENCY PROFILING IN A BANKING INDUSTRY...

RISK LEADERSHIP – CHANGING THE PARADIGM COMPETENCY PROFILING IN A BANKING INDUSTRY SUSCEPTIBLE TO DISRUPTION

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Oliver Wyman recently undertook a survey to benchmark the competencies of those managing and leading the Risk function in banks based in Europe. The aims were to capture information about disruptive trends in the banking industry and to understand which actions might enable Risk functions to respond to these trends. The results of our survey suggest that major shifts in competencies are required to prepare the Risk function and its leadership teams for the changes to come. We argue that a fundamental disruption will be required as a foundation for success over the next five to ten years. This report outlines how Risk leaders can prepare for this challenge.

RISK LEADERSHIP – CHANGING THE PARADIGM

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On a Saturday afternoon in September 2025, Chris is at his favorite café. Although quite busy

in his professional life as the Chief Risk Officer (CRO) of TradBank, he occasionally sets

aside time to enjoy relaxing moments like this to reflect on his career and his leadership team.

While vacantly looking at cheerful customers coming into the café, he recognized Joanne,

an old university friend he has not spoken to since graduation. He has been keen to catch up

with Joanne, especially since her appointment as the CRO at DisruptBank a few years ago.

Joanne’s face lights up when she sees Chris waving; the two grab a table and start chatting.

SEPTEMBER 2025: TWO CROs WALK INTO A CAFÉ

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DisruptBank seems to be doing well! What’s the secret to your success?

Good one! A mix of ingredients, I’d say. Most importantly, I worked

in the business so I understand our colleagues, their language,

and the big picture. My experience at Google came in handy during

the digital revolution era. I think that CROs need a wide-ranging set

of competencies in this ever-changing world.

Interesting. I disagree, though. I wouldn’t claim that experience with

the business or Google is vital. I rely on my IT team for all things digital.

But being an absolute expert in all risk types and risk modelling is critical.

I disagree. I don’t need to understanding the modelling in detail.

It’s more important to grasp technology so we’re confident steering

through the evolving digital landscape.

But help me understand where you’re coming from. Which

competencies will be important to you?

My expertise in both credit and market risk. Without it, I couldn’t do my

job or interact with regulators. In my world, that’s the key to success.

For me, a broad but sound understanding across all types of risk

is more important than deep expertise in just one of them. The regulator

no longer drives our agenda, and the management of credit and

market risk is largely commoditized.

Seriously? I couldn’t disagree more. In my world, having in-depth

expertise is fundamental.

Granted, the “right” set of competencies is determined by the world

we live in. My world is a disrupted banking world, and I wouldn’t survive

with expertise in just one area of risk.

But tell me, what would you have done if the industry were fundamentally

disrupted in your world like it is in mine? Would your approach

have survived the disruption? I think I could live in your traditional world

just as well as I do in my disrupted world.

Chris

Joanne

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DisruptBank and TradBank operate in two different environments. In each of these, the

banking industry panned out quite differently over the previous decade, and Risk functions

adapted their operating models accordingly. Exhibit 1 summarizes the two environments.

After recovering from the amusing coincidence that both of them hold CRO positions,

Chris and Joanne are drawn into a debate about their careers and experiences.

Joanne and Chris have reacted very differently in their respective environments. Consequently,

two very distinct styles of Risk functions and leadership teams have evolved. Joanne emphasizes

qualities such as strategic thinking, digital savviness, talent management, and communication.

For Chris, the focus is on stakeholder management, analytical aptitude, and market insights.

Exhibit 2 illustrates these differences in a number of areas. We based Chris and Joanne’s

profiling on Oliver Wyman’s Risk Leadership Competency Framework.

The Oliver Wyman Risk Leadership Framework helps to assess the competency profile of CROs

and their direct reports across four dimensions. We introduce the framework on page 13

in more detail.

Exhibit 1: State of the banking industry in 2025

AREA DISRUPTED ENVIRONMENT TRADITIONAL ENVIRONMENT

Macro- economics

• Long-term continuation of economic malaise • Increasing pressure on efficiency

• Regular five- to eight-year boom–bust cycle returns • Focus on enabling growth rather than efficiency

Technology • Customers embrace tech • Tech development grows faster outside banks than in–house • Tech providers remain largely unregulated or under-regulated compared to banks • Modularization takes off

• Tech advancement is slower than expected • High barriers of entry and cultural rejection limit the scale of challengers

Regulatory environment

• Shift towards deregulation and simplified standard approaches • Tech providers are encouraged to enter the market

• Continued regulatory scrutiny • Regulatory activities remain resource-intensive • Balkanization of regulatory regimes and protectionism • Tech providers come under increased regulatory scrutiny

Risk environment • New non-financial risks enter the centre stage; management of traditional risks (e.g. credit risk, market risk, etc.) is largely automated • Incumbent banks are disadvantaged by legacy systems and approaches

• New risks do not materialize in unexpected ways • Incumbent banks are seen as more reliable in managing new risks

Operating model

• Risk systems and IT are largely outsourced and core processes or approaches commoditized • Blurred distinction between first and second lines of defence (1st LoD and 2nd Lod) as Risk defines many of the 1st LoD decision-making algorithms • Flatter hierarchies; Risk works side-by-side with the 1st LoD in an agile working model

• Banks adopt tech in-house; Risk IT becomes an integral part of Risk • Automation of credit decisions has progressed but distinction between 1st and 2nd LoD remains strong • An agile operating model is not widely adopted

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Exhibit 2: Competency profiling: Joanne (CRO, DisruptBank) vs Chris (CRO, TradBank)

Strategic thinking/big picture focus

Digital aptitude

Market insight

Change leadership

Results focused

Change execution

Knowledge acquisition and creation

Analytical aptitude

Culture

Motivation

Communication

Stakeholder management

Self-awareness andwillingness to grow

Positive example

Talent management

Team management

Joanne

Chris

Managing people

Influencing

Strategic

Operational


Digital aptitude

Market insight

Change leadership

Results focused

Change execution


Analytical aptitude

Culture

Motivation

Communication


Self-awareness andwillingness to grow

Positive example

Talent management

Team management

Joanne

Chris

Managing people

Influencing

Strategic

Operational

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HOW ONE GROCER PACKED MORE PUNCH INTO THEIR STORES

A major European grocer wanted to dedicate more space to categories identified as being

important to attracting customers to the store, and at the same time increase basket sizes by

introducing entirely new categories. Both of these require more space: by applying an approach

similar to that described here, the retailer was able to condense the rest of the assortment to

provide it.

First, the retailer strengthened its ranges by eliminating duplication, and adding new lines which

commanded real customer loyalty. A new ranging tool, which modeled the switchability of

demand across items, meant buyers could estimate the net sales gains from adding or removing

products. By allowing them to develop stronger planograms in an efficient, scalable way, it

produced space productivity gains of over 4% in the retailer’s mature stores.

Second, the retailer looked for opportunities to “squeeze” categories with lower productivity. By

comparing choice and space elasticity data across different areas of the store and taking its long-

term objectives for each category into consideration, the retailer found opportunities to free up

additional shelf space by removing entire bays of slow-selling products in many categories.

Third, the retailer reviewed shelf stocking rules to identify and eliminate “spare” space in each

bay, comparing operating practices with rate of sale data, and understanding where stores

were and weren’t complying with the old guidelines. Removing unnecessary facings across the

whole store allowed the same assortment to be condensed into around 3% less space, freeing up

additional shelf bays for new categories.

The overall impact of these initiatives was strongly positive: the retailer was able to condense a

more powerful assortment into significantly less space, and achieve an improvement in space

productivity of over 10%, as shown in Exhibit 3.

CASE STUDY

“Talent management has historically been underemphasized – particularly in Risk. If we do not invest

today and up our game, we will have structural problems in the near future. In particular, we find

ourselves competing with a set of new market participants, which historically weren’t relevant for us,

amongst them FinTechs and technology companies such as the Googles and Apples of this world.

The skills are essentially the same!”

CRO, Regional retail bank

BACKGROUND TO THE RISK LEADERSHIP COMPETENCY BENCHMARKING SURVEY

During the first six months of 2017, Oliver Wyman undertook a survey

to benchmark the competencies of Risk function leaders in the European

banking industry.

AIMS OF THE SURVEY

• Capture information about potentially disruptive trends

in the operating models of Risk functions

• Identify the changes that Risk leadership teams would need to make

to their competency profile to enable them to respond to those trends

GEOGRAPHIC SCOPE

• More than 20 interviewees: more than 15 Group CROs and

additional Risk leadership team members of financial institutions

across Europe

PARTICIPANTS

• Global and domestic systemically important banks (G-SIBs and D-SIBs)

• International wholesale and retail banks

• Regional banks under the Single Supervisory Mechanism (SSM)

• Specialized institutions

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In our survey, we focused on two areas of interest:

• Trends and drivers that affect the Risk function, its leadership teams, and the required

competency profiles

• Assessments of the industry’s Risk functions’ maturity today, based on Oliver Wyman’s

Risk Leadership Competency Framework, and the industry’s ambition for the next five years.

Unlike skills, competencies do not refer to specific learned activities but to a broader ability

to perform the requirements of a role with proficiency. Oliver Wyman has developed maturity

ladders for all four competency areas. TRENDS AND DRIVERS AFFECTING THE RISK FUNCTION Our survey indicates that the future Joanne envisages is quite plausible, because there are

three trends that have the potential to transform the way Risk functions operate.

Trend 1: Cost and efficiency linked with technology and digitization

More than 90 per cent of survey participants have observed the pressure for more effective

and efficient risk management. Such pressure has led to an upward trend in the digitization of

the risk function (for example, artificial intelligence (AI), machine learning, and big data), with

companies recognizing that efficiency and effectiveness can be improved over the long term

by investing in technology.

One of the biggest challenges resulting from this digitization lies in developing, attracting, and

maintaining a digitally savvy talent pool. Participants in our survey reported stiff competition

for people with this kind of ability – competition from within the financial services industry and

from technology companies in other industries (such as start-up and mature tech companies).

RISK LEADERSHIP COMPETENCY BENCHMARKING SURVEY

“Steering the Risk function through digitization has become an existential question which will

completely change who we are and how we work. Today, we are not even close to capturing

what that means.”

CRO, Global universal bank

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Exhibit 3: Survey results on priorities and resource allocation – objectives

WHICH ARE YOUR PRIORITY OBJECTIVES? TODAY IN 5 YEARS

Comply with regulation 7 8

Prevent losses due to business activities 5 5

Trusted advisor to the business 8 7

Attractive environment for top talent 5 7

Help the bank grow top-line 5 7

Source of constant innovation 5 7

Be as efficient as possible 5 5

Ranking: 1 – low to 10 – high; blue highlight refers to key step changes.

Exhibit 4: Survey results on priorities and resource allocation – resources

ON WHICH ACTIVITIES DO YOU SPEND MOST RESOURCES? TODAY IN 5 YEARS

Advisory services to senior management and business 6 7

Innovation development 3 7

Ad hoc analytics and stress testing 7 7

Risk identification and assessment process 5 6

Methodology and model development (incl. validation) 8 6

Risk framework and policy development (incl. risk appetite/limits) 6 5

Controls and Compliance 7 5

Function management/Change management 3 5

Interface management 4 4

Standard analyses/Report production (incl. regulatory reporting) 6 3

Ranking: 1 – low to 10 – high; blue highlight refers to key step changes.

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Trend 2: Shift towards innovation

There was a coherent understanding among interview participants that Risk, which has not been

known for its innovation excellence, needs to up its game and start investing more and more in

this area. Some respondents went as far as saying that Risk should become the new innovation

hub within their bank, enabling front-to-back process innovation (linked, of course, to digitization).

Examples include innovative programmes and apps across the credit process, from idea to reality,

and innovative and new data handling that also supports other areas in the bank. For this to work,

there needs to be a major shift in tasks and competencies, enabling innovation to become

part of the DNA of the Risk function. This is a step change leading to a major adjustment in

the self-perception and vision of those who manage risk.

Trend 3: Levelling-off of regulatory demands

An overwhelming majority of the banks we surveyed expect that regulatory demands will level

off moving into a more steady state in a business as usual environment. Don’t mistake this for

regulatory pressure to seize – it is just an increasing efficiency with which regulatory demands

are served given the increasing stability of these. This could free up time and resources, especially

for the activities that CROs wish to focus on more extensively, like advising the business and

contributing to top-line growth or ad-hoc analyses. In other words, Risk functions are likely to

divert proportionally fewer resources on technical, methodological, and reporting activities

and instead focus more on services that add value for the business. This potential may raise

the question of whether the competency profile of the current Risk leadership is fit for the

future (Exhibit 3 and Exhibit 4).

“Efficiency is key. And efficiency can only be achieved through new technology – no doubt

about that. In order to cope with that, we need to disrupt our talent, our talent management,

and our recruiting. If we do not hire the right people today, we will have lost in five years’ time.”

CRO, European universal bank

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Using the maturity ladders in our Risk Leadership Competency Framework, we assessed

the current state of play in Risk functions and the ambition or change that would be required

over the next five years. Broadly speaking, some core step changes will be needed across most

areas, and that means a fundamental disruption in the competencies of today’s Risk leaders.

New and unexpected changes will massively influence the abilities that risk executives are likely

to need in the future. As these competencies take time to develop, with input from different

types of individuals, businesses should start disrupting their Risk function now. And this means

redefining the function’s strategy and vision today so it can meet tomorrow’s requirements.

Below, we summarize some of these core changes in four areas: strategic competencies,

operational competencies, managing people, and influencing people (Exhibit 5).

Strategic competencies

All respondents agreed on the need for a broader shift towards strategy as a core ability

of Risk functions. This is supported by an increased focus on strategic thinking and digital

aptitude, being the core pillars of this competency. Equally, there was unanimous agreement

that traditionally important competencies, such as market insight, decline in importance as

they become increasingly commoditized.

Operational competencies

Interestingly, despite a step change in the strategic dimension, operational competencies

are expected to be broadly maintained at today’s levels, with a “more of the same” approach.

One exception is knowledge acquisition. Respondents rated this as an important ability

if they were to excel as risk managers or leaders. This is clearly the result of innovation and

digitization finding their way into the Risk function’s work, driving the need to develop new

skills and, therefore, extend knowledge.

Managing people

Talent management is one of the hidden and undervalued factors affecting future success.

Every interviewee in our survey described the upgrade required in that area as a major step

change for their respective organisation and absolutely vital in order to succeed. Historically,

Risk functions have been weak in placing enough emphasis on this competency. It was simply

not seen as a priority. With new disruptive market entrants and an increasing struggle to find

the right talent, along with unexpected competitors (as corporates and tech firms alike look

for similar skillsets), talent management becomes a cornerstone for the future success of

a Risk function. So it is essential for the Risk leadership team and the function as a whole to view

competencies in people management as a high priority.

Influencing people

Softer factors, such as culture and communication, which historically have not held a strong

position with the Risk function, will become more important. Why is that? Risk leaders are

convinced that the ability to influence will be at the heart of Risk functions. Influencing

behaviour (in the context not only of risk culture but also of top-level strategic decision-making)

will become a core competency. As this is regarded as a new field of expertise, and something that

most Risk functions lack, Risk leadership teams will have to make a step change in their abilities.

MATURITY ASSESSMENT: OLIVER WYMAN’S RISK LEADERSHIP COMPETENCY FRAMEWORK

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Average industry (current)

Required in a disrupted future

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34

5


Digital aptitute

Market insight

Change leadership

Managing people

Influencing

Strategic

Operational



12

34

5


Digital aptitute

Market insight

Change leadership

Managing people

Influencing

Strategic

Operational

12

34

5

Results focused

Change execution


Analytical aptitude



12

34

5

Team management

Talent management

Positive example

Self awareness and willigness

to grow



12

34

5


Communication

Motivation

Culture



Exhibit 5: Results from our Risk leadership competency benchmarking survey

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It is 2030 and disruption has taken place in the banking industry in Chris’ scenario, a little

later than it did in Joanne’s. As TradBank’s Risk function had not been equipped to respond

to disruption, a competitor acquired it. In particular, the bank’s Risk function had a rigid

operating model that was unable to keep up with industry developments, and its Risk

leadership did not have the right competencies to steer the transformation and lead the bank

through an ever-changing landscape.

Following the acquisition, Chris retired. His daily afternoon stroll takes him to the same café

where he met Joanne five years ago. Once inside, he cannot help but contemplate how his

Risk function might have been more successful if he had been persuaded by Joanne’s arguments.

With the benefit of hindsight, he would like to go back to 2017 and advise his Risk function

to embark on a transformation programme to prepare for an industry-wide disruption. He

would make four main suggestions.

1. Be ready for disruption and to invest in an agile and responsive Risk function to be able

to cope with a range of future states.

By definition it is not possible to pick a single planning scenario and, as a strategic partner

to the business, risk management teams should be fully engaged in the strategic and scenario

planning process, and master agile approaches to working to accelerate their speed-to-

change. This requires in particular the Risk Leadership team to lead by example and broaden

their own competencies to embrace this core challenge of the Risk function going forward.

2. Act on your desire to become more strategic. The role of the Risk function in setting

out a strategy can be broader than it currently is, and it can add more value.

To optimize risk-return, focus on the big picture.

Risk functions need to embrace a more strategic role and redefine their place when it comes

to strategic discussions and decision-making. The Risk team as a whole will be taken seriously,

and accepted as a peer at the strategy table, only if the Risk functions upgrade their strategic

competencies.

IF CHRIS KNEW THEN WHAT HE KNOWS NOW …

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3. Strengthen communication, motivation, and other factors to sustainably influence

the organisation as a whole and drive culture, behaviour and conduct. These are the hidden

ingredients for success and yet they are unlikely to be in your Risk function’s DNA.

Today’s Risk functions pride themselves in their analytical excellence, very detailed and

comprehensive understanding of risks, and sustainable management of their institution’s

risk appetite. Behavioural and cultural factors are still massively underemphasized and

typically not seen as a priority by most of today’s Risk leadership teams. But you will succeed

in an increasingly connected world only if you are able to engage with the entire institution,

communicate effectively and constructively, and motivate all sorts of people within and

beyond your direct remit.

4. Invest in the next generation. Make tomorrow’s Risk talent and leaders your core

priority, don’t settle for more of the same; hire the not-so-obvious candidate who brings

new but necessary competencies.

Risk functions now have a clear mandate regarding talent management. Identify talented

people who have a rounded competency profile, an excellent grasp on technology, and the

ability to communicate effectively and influence others. Focus on candidates who have a

vision of the future and a passion to drive that vision. Lastly, leverage the strength of a diverse

workforce: Look for alternative sources for talent, from non-typical career paths and atypical

CVs. By attracting and retaining top talent, you will build a foundation for success – and the

most basic way to achieve this is to create career paths that appeal to high achievers.

How to achieve these major step changes across your Risk function as a whole and your

Risk Leadership team in particular will heavily depend on the individual institution’s starting

point which varies significantly. One observation is shared across our interviewees: Only if you

embark on the journey of change today, you will be ready in time to react to whatever state

of the future pans out in reality.

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Narrow strategic thinking.

Moderate ability to identify change initiatives.

STRATEGIC

COMPETENCIES

Moderate track record of strategic thinking.

Limited ability to leverage market insights/ regulatory developments.

Good ability to execute change initiatives.

Understands and synthesizes data into strategic/big-picture conclusions.

General understanding of the power of digitization.

Moderate ability to leverage market insights/ regulatory developments.

Challenges status quo and can identify areas where change is needed.

Proven ability to weigh up a number of key factors in driving strategic decision- making.

Risk function can benefit from digitization but requires assistance to identify how to effect a digital transformation.

Good ability to leverage market insights/ regulatory developments.

Challenges status quo, identifies areas where change is needed and defines target state.

Future thinker and visionary, influencing strategy development at executive committee level.

Digitally savvy with good understanding of how technology can help innovate and improve the risk profile of the bank in general and the Risk function in particular.

Thought leadership leveraging a strong awareness of external market and regulatory developments.

Identifies and drives change through different and innovative approaches in order to react to evolving situations.

Able to drive results forward.

Some ability to execute change.

Fairly results focused, often using traditional methods to deliver Able to execute change.

Captures new knowledge to keep up to date.

Results focused and using innovative processes to deliver results.

Effective at managing change, actively works to remove barriers.

Captures new knowledge and actively shares with team.

Analytical aptitude used in interpreting work from team.

Results focused – collaborates with others across business to drive outcomes, using innovative processes.

Effective at managing change, removing barriers, and leverages cross- organizational support.

Committed to training team, front runner in capturing up-to-date knowledge.

Analytical aptitude used in decision-making, the go-to person for analytical thinking.

Highly result focused – ability to build an environment to achieve results in line with right values, collaborates across business.

Highly effective at managing change, reputation for being a mediator and as someone who gets things done.

Actively extracts new knowledge, trains risk team and contributes to risk method innovation.

High analytical aptitude, guides the design of difficult pieces of analysis for the team and clearly explains rationale for decision to others.

OPERATIONAL

COMPETENCIES

OLIVER WYMAN’S RISK LEADERSHIP COMPETENCY FRAMEWORK

LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4 LEVEL 5


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Moderately effective at team management and communication.

Awareness of own management style.

Effective at team management and clear communicator.

Is open to ambition of team members to grow towards next level roles.

Awareness of how own management style affects team.

Communicates with high impact, expert team manager.

Contributes to talent management and encourages team members to develop.

Actively contributes to positive team environment.

Open to feedback on management style and encouraging work-life balance of team.

Proven ability to manage teams effectively and set goals, even during crunch times.

Takes time to actively support talent management and creates opportunities.

Contributes to positive team environment and exemplifies values to the team.

Actively seeks out feedback on management style and very encouraging of growth from self and others.

Highly effective at team management with a strong executive presence whilst having the ability to clearly communicate and set goals.

Actively builds the next generation of talent and dedicates time to develop, support, and create opportunities for staff, has also developed a talent management strategy.

Exemplifies team values and management, creates environment of trust .

Has a dynamic management style, understands team dynamics, and is very approachable on sensitive issues.

MANAGING

PEOPLE

Understands stakeholders in wider context.

Moderately clear communicator.

Able to obtain buy-in from stakeholders on most recommendations, understands wider context.

Generally a clear communicator.

Some appreciation of team’s personal/life well-being.

Obtains stakeholder buy-in even on difficult/controversial recommendations, trusted by executive Board.

Clear communication around expectation and goals.

Adopts a motivational style that encourages collaboration and builds a sense of connection.

Proactive on personal life and well-being issues.

Creates a strong network with senior stakeholders in the organisation.

Excellent communicator, including on sensitive issues.

Takes care to mentor, coach, or sponsor people in their firm, highly motivational.

Understands and modulates effect of own style on colleagues, actively builds towards a culture of accountability while paying attention to personal life issues.

Demonstrates seasoned diplomacy skills with stakeholders and resolves conflicts with high degree of professionalism.

Communicates with high impact and effectively uses influencing skills to achieve results.

Ability to energize and motivate peers within and outside the organization, boosting their drive to reach an end goal, encourages collaboration and builds a sense of connection.

Sets the tone and leads by example in building a culture of accountability, with high moral standards while paying attention to personal life issues.INFLUENCING



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AUTHORS

CLAUDIA FELL

Partner in Oliver Wyman’s Finance & Risk and Organizational Effectiveness practice

based in our Dusseldorf office

DOMINIK WEH

Partner in Oliver Wyman’s Finance & Risk and Public Policy practice

based in our Frankfurt office

PETROS ANDREOU

Manager in Oliver Wyman’s Finance & Risk and Organisational Effectiveness practice

based in our London office

Copyright © 2017 Oliver Wyman. All rights reserved.

Oliver Wyman is a global leader in management consulting that combines

deep industry knowledge with specialized expertise in strategy,

operations, risk management, and organization transformation.

www.oliverwyman.com

ABOUT OLIVER WYMAN

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COMPETENCY PROFILING IN A BANKING INDUSTRY …...COMPETENCY PROFILING IN A BANKING INDUSTRY...

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