The Importance of a Chief Risk Officer in a VC Fund

Posted by in Business & Entrepreneurship, Leadership & Management

In Venture Capital, Chief Risk Officers have a very important role in strategic management which is a determinant of the success of the organization. They have an important role in stewardship of the available financial health of the organization which allows for the establishment of key opportunities that are used during implementation of suitable elements of strategic management and aligning this with other activities that are involved. They are part of the board and are used in the overall risk oversight. CROs are very central in any VC where they are involved in the management of varied risks that face a VC organization. They carry out their functions through severity assessment, probability testing, and mitigation analyses.

Role of CROs in Building Strong Links Connecting Risk Management to the Processes Used in Business Planning

It is here that the specific areas and how the available risks will affect the business plan that is being used. This allows the executive committee to give attention to the challenges indicated and matching them with suitable actions to make sure that the set performance goals are met. They are hoped to make use of systematic stress testing when carrying out financial analysis and planning. This is a sure way that the management will be assured that the business plan has sufficient potential when it comes to macroeconomic scenarios. Their probabilistic functions help to give an insight into the expected success of the organization.

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Role of CROs in Corporate-level Discussions to Address Risk Preference

They are in charge of equity which comes last in the risk capital of any organization. They lead the management of their organizations in executing the right strategies to address financial risks and evaluating the expected implications.


In general, CROs are in charge of the proposals that are discussed before they are presented to the management to aid in decision making. Risk assessment is discussed in detail to define the right financial foundations and analytics that are associated with the selected options to ensure that they are the best in addressing the issues at hand. Their use of analytical risk methodologies helps to improve the expenditure decisions that are involved.

Recommended Reading
  1. Friedman, H. (2016). Implications of a multi-purpose reporting system on CEO and CFO incentives and risk preferences. Journal Of Management Accounting Research.