Interview No. 10: Dr. Enrico Piotto is Chief Risk Officer and member of the Executive Committee, EFG International. He has just joined the board of directors at Swiss Risk Association and brings in an international background in the financial services industry and Wealth Management. He has profound knowledge in credit risk and will help to create this chapter within the SRA. His motivation: give something back to the Swiss Risk Association community, help defining standards and leading methods and sharing experience with others. He wants to promote Switzerland as the leading center for risk management.
❓𝐖𝐡𝐲 𝐢𝐬 𝐫𝐢𝐬𝐤 𝐦𝐚𝐧𝐚𝐠𝐞𝐦𝐞𝐧𝐭 𝐢𝐦𝐩𝐨𝐫𝐭𝐚𝐧𝐭 – 𝐢𝐧 𝐛𝐮𝐬𝐢𝐧𝐞𝐬𝐬 𝐚𝐧𝐝 𝐢𝐧 𝐝𝐚𝐢𝐥𝐲 𝐥𝐢𝐟𝐞?
Risk is a part of everything we do in business and in our private lives. Risk cannot be avoided, and every organization, as well as every private individual, should define and clearly stipulate their own risk appetite. Understanding the risk and judging whether it is within or outside the risk appetite should be one of the drivers of every decision.
❓𝐈𝐧 𝐛𝐮𝐬𝐢𝐧𝐞𝐬𝐬 – 𝐖𝐡𝐚𝐭 𝐡𝐚𝐯𝐞 𝐲𝐨𝐮 𝐥𝐞𝐚𝐫𝐧𝐭 𝐨𝐧 𝐫𝐢𝐬𝐤 𝐦𝐚𝐧𝐚𝐠𝐞𝐦𝐞𝐧𝐭 𝐭𝐡𝐚𝐭 𝐬𝐡𝐨𝐮𝐥𝐝 𝐛𝐞 𝐬𝐡𝐚𝐫𝐞𝐝?
Because risk cannot be avoided, it should be compensated for. Organizations and individuals should define their minimum return on risk. In every strategy:
a) understanding the risk,
b) judging whether it is within or outside the risk appetite,
c) assessing if the risk return is above the minimum threshold
are the pillars of sound decision-making. Finally, in every undertaken risk, always plan for the way-out scenario. Hope is not a strategy…
❓ 𝐈𝐧 𝐩𝐫𝐢𝐯𝐚𝐭𝐞 – 𝐖𝐡𝐚𝐭 𝐢𝐬 𝐭𝐡𝐞 𝐛𝐢𝐠𝐠𝐞𝐬𝐭 𝐩𝐞𝐫𝐬𝐨𝐧𝐚𝐥 𝐫𝐢𝐬𝐤 𝐲𝐨𝐮’𝐯𝐞 𝐞𝐯𝐞𝐫 𝐭𝐚𝐤𝐞𝐧?
When I was a teenager, I wanted to try everything, explore everywhere, and visit every place. Sometimes, I found myself in dangerous situations. Fortunately, I always managed to come back safely, but looking back, I realized that I had been underestimating the risks. I used to say, “This can’t happen, and if it does, it won’t happen to me.” I learned to understand the risks, take ownership of them, and exert control.
❓𝐖𝐡𝐚𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐰𝐨𝐮𝐥𝐝 𝐲𝐨𝐮 𝐠𝐢𝐯𝐞 𝐲𝐨𝐮𝐧𝐠 𝐩𝐫𝐨𝐟𝐞𝐬𝐬𝐢𝐨𝐧𝐚𝐥𝐬 𝐢𝐧 𝐫𝐞𝐠𝐚𝐫𝐝𝐬 𝐭𝐨 𝐫𝐢𝐬𝐤?
The most significant lesson I learned from a professional skipper is that we all have two hearts: one heart wants to push the boat and go faster and faster; the second heart knows the boat can break and wants to keep it within a safety buffer from the breaking point. Risk management involves finding the balance between these two hearts. Whatever race we are running, we all like to win. However, to be the first to arrive, you must ensure first you arrive.
❓𝐒𝐰𝐢𝐬𝐬 𝐑𝐢𝐬𝐤 𝐀𝐬𝐬𝐨𝐜𝐢𝐚𝐭𝐢𝐨𝐧 – 𝐰𝐡𝐲 𝐚𝐫𝐞 𝐲𝐨𝐮 𝐩𝐚𝐫𝐭 𝐨𝐟 𝐭𝐡𝐞 𝐧𝐞𝐭𝐰𝐨𝐫𝐤 𝐚𝐧𝐝 𝐰𝐡𝐚𝐭 𝐢𝐬 𝐲𝐨𝐮𝐫 𝐩𝐞𝐫𝐬𝐨𝐧𝐚𝐥 𝐯𝐚𝐥𝐮𝐞?
Risk management in the financial industry is a combination of rigorous methods as well as art and experience. SRA is instrumental in both:
a) In collaboration with universities, SRA defines the best standards and leading methods.
b) By convening long-term serving professionals, SRA provides a forum for sharing experience.
With two and a half decades in the industry, my commitment to SRA is to bring both aspects and promote Switzerland as the leading center for risk management.