Cultivating and Implementing A Sustainable Risk Intelligent Culture
Ramesh Pillai, Group Managing Director, Friday Concepts
“Why is culture so important to a business? Here is a simple way to frame it. The stronger the culture, the less corporate process a company needs. When the culture is strong, you can trust everyone to do the right thing.” – Brian Chesky, Co-founder and CEO of Airbnb
Risk culture is at the heart of the human decisions that govern the day-today activities of every organization and is relevant to all parts of the organization. Where attention is paid to risk, the focus is more often than not on improving existing risk management systems and models rather than tackling the underlying culture. While the burden of today’s short-term economic pressures is undeniably heavy and time consuming, managers should recognize that a strong risk culture plays a critical role in determining an organization’s health and performance. It should therefore be among the first things that managers consider as their organizations move through the economic cycle, not the last. Risk culture is the system of values and behaviours present in an organization that shapes risk
decisions of management and employees. One element of risk culture is a common understanding of an organization and its business purpose. Employees must recognise that risk and compliance rules apply to everyone as they work towards business goals. This understanding can ensure a company “does the right thing” and is a fundamental part of good ERM practices. In order for there to be a strong risk culture, employees need training to understand how to make educated risk-related decisions to ensure consistent risk behaviour in an organization.
As risk is about uncertainty in facing the future, it would seem logical that a desirable risk culture would position the organization to be proactive as an early mover that quickly recognizes a unique opportunity or risk and uses that knowledge to evaluate its options, either before anyone else or along with other firms that likewise seize the initiative. Such a culture would give management the
advantage of time, with more decision-making options before shifts in the market invalidate critical assumptions underlying the strategy.
Many Companies recognize that risk culture is important but struggle to develop a robust method for measuring and tracking progress over time. Since the challenge of measuring risk culture is intrinsically linked to measuring other organizational features, you need an approach and appropriate diagnostic tool that reflects such identified organisational features.
1. Risk culture in context and its definition
2. Risk culture: Defining the weak end of the continuum
3. Diagnosing and measuring organisational risk culture
4. Understanding the sources of risk culture failure
5. The risk assessment journey: benefits for managers
6. Risk culture case studies
7. Risk culture – Measurement and diagnostics
8. Risk culture presents opportunity
9. Changing a risk culture
10. Ten questions a Board should ask itself
11. What do we do next?
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