Risk Culture Prevents Risky Behavior
by Miki SaxonAre you familiar with risk culture? You should be, no matter your position in your company.
Risk culture is “defined as the system of values and behaviors present throughout an organization that shape risk decisions. Risk culture influences the decisions of management and employees, even if they are not consciously weighing risks and benefits.
“A company’s risk culture is a critical element that can ensure that “doing the right thing” wins over “doing whatever it takes. … When companies reward reckless conduct, or results gained through any means, the risk management message becomes diluted. … Having a strong risk culture means that employees know what the company stands for, the boundaries within which they can operate, and that they can discuss and debate openly which risks should be taken in order to achieve the company’s long-term strategic goals.”
It takes time, effort, commitment from the top, starting in the board room, and support at every level of management.
Once acceptable risk is decided upon, folded into your culture and communicated it’s most important to use it as a filter in the hiring process.
In fact, the only way to ensure that your corporate culture, risk tolerance, values, etc., continues is to hire people who are, at the very least, synergistic with them.
Read the articles and if you have any questions, or want some help learning to use your culture as a filter, give me a call at 866.265.7267 between 8 am and 11 pm Pacific time or email miki@RampUpSolutions.com. (Calls are better; email can get blocked by filters.)
NO charge—I do it for fun.
Image credit: neuza teixeira on flickr
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May 22nd, 2009 at 9:20 am
So many things can alter risk behavior I like the idea of calling it culture. That reminds us that even though the hiring decision is very important, the system of rewards, penalties and recognition alter behavior as well regardless of what the rules may argue for.
May 22nd, 2009 at 9:33 am
Hi Fred, Defining the level of acceptable risk and making sure it permeates the organization really does help people perform their jobs. Having to guess how far is too far leaves most people in a quandary, paralyzes others and gives the few a license that can put the entire company at risk. And I agree that rewards, recognition and accountability need to support the acceptable risk standard.