Corporate culture encompasses brand values, employee attitudes, policies and standards. A company’s risk appetite makes up a huge part of this and the risk management strategy has to be embedded across an organization to ensure a stable business.
Creating a culture without a thought for risk, is a recipe for chaos. Imagine a business where employees are confused about what is an acceptable, or even ethical risk, or what actually constitutes a risk.
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With that in mind, it makes sense that Risk Managers should be sitting at the table with, senior management and the internal communications leaders during discussions on nurturing company culture.
In today’s society, enterprise risk comes in all shapes and forms. Cyber risk is on the rise, accidents in retail outlets can cause companies headaches, over concentration on one supplier can create huge issues if they fail or accepting the wrong business deal could jeopardise the viability of the company.
A 2016 study of its members by risk management association AIRMIC, highlighted that more than two thirds of them thought their organization did not have an embedded risk culture and cited it as a top-three concern. Georgina Oakes, research and development manager at AIRMIC, discusses this further in an article on creating positive culture.
Employees need to be given the tools and knowledge to take positive risks and avoid those that probably would lead to a loss, such as regulatory issues, incidents or near misses. Risk managers should be given the opportunity to influence company policies and values that are filtered through the whole organization in order to achieve this.
You can’t create a corporate culture that includes risk management without breaking down communication barriers between all levels of employee in a company. Risk managers will already know that a company that encourages honest, two way feedback is an organization that is better at identifying key internal issues, better at preventing loss-creating incidents and better at highlighting potential opportunities. Especially for opportunities encouraging robust and positive feedback, helping drive innovation and best practices.
The Institute of Risk Management agrees. They have visualized their thoughts on the relationship between risk and a company’s ethos in their risk culture framework. Their belief is that risk management should influence and help shape everything from individual behaviours to the organizational culture.
The benefits of a risk culture
A survey by the Corporate Executive Board of more than 400,000 employees across various industries found that by having honest feedback not only reduced fraud and misconduct but also delivered industry leading shareholder returns.
One of the best ways to support risk management is through implementing a risk management technology system. It enables employees to embrace an embedded risk culture and, if used effectively, can save organisations huge amounts of time and money.
Our clients have seen positive changes in company culture when implementing enterprise risk management software technology into their business. For example, Abertis has consolidated insurance data from across 17 countries and 5 business lines to enable staff to talk to each other and make business decisions in one common language.