To prevent corporate failure, leaders must look past flawless compliance dashboards and actively supervise risk culture by addressing behavioural warning signs early.
Key Insights
- Mature organisations treat pristine risk dashboards as red flags, deliberately inviting amber and red indicators so management can tackle threats before they escalate.
- Aggressive commercial targets and misaligned incentives are the primary drivers of conduct risk, pressuring teams to bypass controls for short-term gain.
- Organisations must embed continuous, data-driven behavioural monitoring into board reviews to hold executives directly accountable for corporate culture.
The global risk landscape is a moving target. From pandemic disruptions to tariffs and ongoing geopolitical conflicts, external threats shift constantly. Yet, the most severe danger often lies within an organisation.
A robust governance framework means little if the underlying corporate culture encourages poor decision-making. Most catastrophic business failures stem from the quiet gap between stated values and actual employee conduct. When leaders fail to embed proactive enterprise risk management into daily operations, they leave their companies highly vulnerable to collapse.
While behaviour remains difficult to quantify, executives can proactively supervise risk culture to close this gap. Speaking at the Institute of Enterprise Risk Practitioners’ (IERP®) Global Conference 2026, Andy Romanis, Chief Risk Officer at Olam Food Ingredients (ofi), explored how organisations build cultural resilience.
He shared practical strategies to spot the early warning signs of conduct risk and align incentives before internal fractures break a business.
Why a Healthy Risk Culture Rejects the All-Green Dashboard
Traditional risk registers often leave organisations blind to subtle shifts in behaviour. In modern enterprise risk management, a clean bill of health is a red flag. A mature risk culture embraces transparency; it welcomes early warning signs instead of burying them.
At ofi, risks are tracked using the classic five-point risk appetite scale. Limits are set deliberately tight, which forces necessary conversations early and address the issue well before they escalate.
However, the expectation is never a perfect operational dashboard. Instead, decision-makers focus on confronting realities and mapping a clear path back to safety. Mr Romanis was unsparing about the danger of false perfection. “If you go to your quarterly Board meeting showing nothing but green lights, you’ll get laughed out of the Boardroom, and in my opinion quite rightly so,” he noted.
How Misaligned Incentives Escalate Conduct Risk
The pressure to present those picture-perfect green lights rarely happens in a vacuum. Misaligned performance metrics and financial incentives are often the primary engines behind poor ethical behaviour. When leaders demand perfection and push aggressive commercial targets, they inadvertently encourage teams to bypass established controls. This pressure dramatically increases conduct risk.
The Volkswagen emissions scandal perfectly illustrates the cost of ignoring compliance for commercial gain. Driven to dominate the market while still passing regulatory lab tests, the manufacturer fitted 11 million diesel vehicles with software which could sidestep regulations. On the road, these cars emitted more than 40 times the permitted nitrogen oxide levels. This deliberate evasion resulted in billions in fines and the prosecution of top management.
Similarly, Wells Fargo serves as a warning against what Andy called “performance at all costs”. The bank fostered an overly aggressive sales culture where employees faced immense pressure to hit targets. They opened millions of unauthorised accounts, harming customer credit scores in the process. Senior management remained fully aware of this malpractice but stayed silent. Anyone who raised a red flag faced retaliation or termination.
In both cases, leaders ignored the amber lights. They prioritised short-term financial performance over long-term corporate culture, which broke their businesses from the inside out.
Frameworks and Tools for Supervising Corporate Culture
Preventing such implosion requires leaders to turn behavioural signals into actionable data. Instead of relying on static annual surveys, organisations must continuously monitor employee conduct. As Mr Romanis noted, “A constant feedback loop is the central part of any enterprise risk management undertaking as it allows the framework to be continually refined.”
At ofi, executives quantify corporate culture through the Integrated Risk and Assurance Framework (IRAF). This system captures emerging threats and embeds them directly into quarterly board reviews. It shifts compliance from a retrospective box-checking exercise into a forward-looking strategy.
IRAF operates alongside other programmes that support effective governance, including the ‘Speak Out’ whistleblowing platform, which provides employees a psychologically safe space to raise a flag.
Together, these tools provide the necessary intelligence to supervise risk culture effectively. When indicators inevitably flash amber or red, management addresses the elevated exposure immediately. Rather than hiding the data, they map out a clear path to green, proving that transparency remains the ideal defence against corporate failure.
Driving Executive Accountability at the Board Level
True transparency, however, demands executive accountability. When corporate culture prioritises speed and profit over safety, the consequences extend far beyond financial loss. Two separate air disasters involving Boeing 737 MAX 8 aircraft, which resulted in 346 deaths, stand as a grim reminder of what can happen when leadership brushes aside internal safety concerns.
To prevent such catastrophic blind spots, organisations must integrate robust enterprise risk management directly into the boardroom. The Chief Risk Officer plays a vital role in bridging the gap between frontline operations and board-level oversight.
At ofi, senior management is required to attest to the company’s code of conduct every year, transforming passive compliance into active responsibility. He emphasised: “Risk culture cannot be a set of documents that are wheeled out once a year, reviewed, signed and put away again.”
By forcing executives to confront uncomfortable truths, where elevated risk markers prompt constructive action rather than punishment, boards can cultivate a resilient risk culture that safeguards the company’s future.
Supervising Risk Culture for Organisational Resilience
Protecting an organisation from systemic failure demands continuous visibility into employee conduct. Moving beyond passive compliance requires treating behaviour as an enterprise-wide priority. As Mr Romanis noted, “Risk culture is built on a daily basis by leaders and their teams working together.”
To establish this psychologically safe environment, executives must embed three principles into daily operations: awareness to recognise threats early, accountability to own decisions, and action to speak up responsibly. When a business cultivates these traits, staff willingly highlight early warning signs.
While missteps are inevitable, leaders who “never waste a good crisis” transform setbacks into crucial learning opportunities. By using past failures to reinforce governance rather than punish staff, they ensure their enterprise risk management frameworks remain dynamic.
