Continuing on from last week's post, Risk culture after COVID-19, this is the second in a series of blogs in which we are summarising key insights gained from about 50 risk managers and CROs interviewed between December 2019 and May 2020.
One of the first things you hear in many culture conversations is, “there’s no such thing as risk culture”.
Despite the fact the Australian Prudential Regulation Authority produced a 2016 report entitled Risk culture, most risk managers these days feel the term risk culture is too narrow. Instead, many talk more broadly about organisational culture and how this impacts risk-aware behaviour and risky decision making in their businesses.
Indeed, many financial institutions, such as Bank of Queensland in a recent case study contributed by its former CRO (Members: access this here), have addressed culture and ethics holistically, tangibly connecting the dots between corporate values, ethical employee behaviour and stronger risk outcomes for the institutions and their customers.
The challenge with widening the lens in this way is that accountability for ‘fixing the culture’ becomes muddy. Is it HR’s job? Is it risk’s? Shouldn’t the ExCo be ultimately responsible? What can you do if you want to drive change?
A unique label?
On the other hand, perhaps there is still value in ‘risk culture’ having its own unique label. In another case study, 'Isn’t risk culture just having a good culture?' (Members: access this here), Dr Gavriel Schneider suggests organisations can focus specifically on risk culture as a subset of culture. Risk culture should be about managing uncertainty and putting processes in place to achieve consistently good decision making, he says.
On the subject of decision making, those who’ve got extra time up their sleeve might be interested to read our summary of a paper by the well-known cognitive bias expert Dr Itiel Dror (Members: click here to read). Dr Dror’s 1999 study looked at how time pressure might affect risky decision making – something we have seen unfolding in practice throughout this pandemic.
Risk Leadership Network’s Intelligence platform – our searchable database of peer-contributed case-studies, tools and templates – delves deeper into risk culture with more on diagnosing culture, addressing culture and ethics, and building a risk culture survey of boards. (Members only)
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