PSP Speaker Q&A
Interview with PSP Investments for OpRisk North America
J. F. Bureau, Senior Vice President and Chief Risk Officer, PSP Investments
How do you feel the role of risk will change in the next five years?
JFB: We’re seeing an evolution occurring over the last decade or so. We’re more interconnected than ever before, so global socioeconomic and political shifts have a real and immediate impact both on the financial and non-financial side of the business. As a result of this recurrent butterfly effect, we need to have so much more on our radar. That includes everything from trade wars, Brexit, rising populism and third-party risks to technological changes, business disruptions, and more. As the world evolves, we need to evolve with it, both reactively and proactively—and hopefully more on the latter for emerging risks. Therefore, it is critical that teams like ours become more and more integrated in the organization as a true business partner. The risk team is no longer alone in a watchtower. Rather, we must embed our watchtower approach within the organizational culture, to multiply our defenses by our number of employees. To get there, we need to build teams with a wider variety of expertise—including cyber, IT, geopolitical and more.
I would also say that strong relationships will become more and more critical. At PSP, we recently opened international offices in New York, London and Hong Kong and we are working to continue to adapt our risk approach to each new geographic sector—be it at the investment/ asset class level or at our international offices.
What key innovations, if any, are changing the way you monitor and assess risk/oprisk?
JFB: The way risk departments and organizations continue to advance, and hone smart analytics, will be key. We are leveraging innovation to better quantify information, and to double down on qualitative approaches so that we have an all-encompassing view that is at once descriptive, diagnostic, emerging and predictive.
In terms of approach, to monitor and assess the gamut of risks the industry faces, it is more essential than ever that we work to ingrain risk within the organizational culture. The best way to do this is to empower employees with this responsibility. That means ensuring you have an organizational culture that encourages employees to raise issues and to speak out, as we do at PSP. Employees must know they are an organization’s first line of defense. As part of an ownership-style culture, people must know they can approach anyone in the organization about anything at any time—without fear of repercussion—and have the tools to do so.
What is your team's greatest strength?
JFB: Our team’s greatest strength lies in its diversity. We have colleagues who come from international security, finance, law, banking, and investment. They provide complementary and varied work and educational experience. But that wouldn’t be enough on its own. We also need people from different backgrounds—whether cultural, geographic, gender, age or other. Why? So to help us avoid blind spots. If a team is homogenized, all its people are looking in the same direction and are that much more likely to miss out on risks or key issues. We need a diverse team that can bring in their diverse insights and experiences but can also educate our organization about different risks and opportunities in their individual scopes. Without our team’s rich diversity, we simply wouldn’t be able to cover it all.
What role does communication play in enhancing risk culture?
JFB: It’s all about transparency. You can’t successfully empower employees unless you have an open, two-way communication system in place. While management must hear employees’ insights, they must also provide employees with organizational insight on high-level risks on a regular basis. At PSP, we communicate our top risks with all employees to build this transparency and create awareness that empowers them as our first line of defense. This includes embedding risk team members within cross-functional committees—to break down silos and build risk culture directly into the organizational DNA.