Writers at The Economist don’t suffer fools, or foolish notions about leadership gladly. So, it’s worth noting when their pointed analyses of a business issue — in this case, significant changes to the CEO’s role — involves third party risk management.
Last month, the publication took a hard look at what it takes to be a chief executive in the 2020s. The column concludes by identifying three crucial leadership qualities, including one centered on third party risk: “A CEO must be able to marshal the data flowing between companies and their counterparties, redistributing who earns profits and bears risks.”
The Economist starts by taking issue with conventional takes on how the CEO role is changing. While many bosses and leadership executives say the job has grown more difficult to marketplace disrupters, the writer disagrees: evidence indicates that large companies have had an easier time churning our healthy profits as the U.S economy grew more rigid and less responsive in recent years.
Instead, the column argues that the CEO role itself is being disrupted by at least two forces. First, leaders are having difficulty exercising control over enterprises that derive more of their value from data and other intangible assets (vs. physical assets). And second, it is becoming increasingly difficult to determine where an enterprise ends and its vendors and other third parties begin. The “boundaries of the firm, and the CEO’s authority, are blurring,” according to The Economist. “Big firms spent $32 billion last year on cloud services from a few powerhouse vendors. Factories and offices have billions of sensors pumping sensitive information to suppliers and customers.” Additionally, trade wars and the pandemic will drive more CEOs and their leadership teams to redesign supply chains — quickly, yet in a risk-intelligent manner.
All of these trends have elevated the strategic importance of information security, third party risk management and operational technology (OT) risk management.
These forces are also rewriting CEO job specifications, according to The Economist. The old core competencies of “opening and shutting plans, buying and selling divisions, and ruthlessly controlling the flow of capital” (think Neutron Jack) are giving way to mastering the complexities of allocating intangible capital, running the company according to the long-term interest of its owners and managing the flow of data in a profitable and risk-savvy manner as it flows among the company and its expanding ecosystem of third parties.
No wonder third party risk management professionals, especially those with the right certification, are getting hired and promoted with growing frequency, even in the current climate. CEOs increasingly need their expertise and insights in order to fulfill their own leadership mandate in the coming decade.
A job search on on LinkedIn or Indeed using “CTPRP” reveals numerous opportunities for risk professionals. This blogpost studies the results of a survey of CTPRP holders and includes salary, background experience and job impact details.