Risk culture is the foundation of risk and resilience.
It influences:
- how people receive knowledge and information on risk and resilience
- the way people communicate with one another
- how individuals react in a crisis situation
- the risk appetite of the organisation and alignment with its leaders’ personal tolerances.
Risk culture reflects the values, behaviours and attitudes towards risk within an organisation. A positive risk culture is essential to a resilient organisation. One of the most important elements to make this effective is clear communication of the risk strategy from the board down through the firm, ensuring colleague alignment throughout the organisation.
However, ‘people risk’ is an often-ignored aspect of risk culture because of the perceived complexities involved in managing it effectively. How does an organisation go about understanding their employees’ risk appetite? And what threats are posed to the operation and strategic objectives of the organisation if this is not understood?
As part of the UK regulator’s effort to improve culture, governance and accountability within the financial services sector, the Financial Conduct Authority (FCA) designed the Senior Managers & Certification Regime (SMCR). This aims to increase trust in financial services by improving senior management accountability for decisions and awareness of conduct issues across firms. The SMCR encourages staff to take personal responsibility for their actions, improve conduct at all levels and make sure firms and staff clearly understand their roles and responsibilities.
The SMCR is a positive step towards creating a risk-aware culture. An important element in this process is understanding an individual’s risk intelligence. This looks at the values, risk competences and behaviours of each individual which together drive their perception of risk, approach to risk-based thinking and decision-making. This risk intelligence will affect how an individual reacts to a normal or adapted environment, such as a crisis situation.
In our Risk and Resilience Academy in partnership with UK Finance, we will cover in detail the importance of risk culture and how to build a positive, proactive risk culture in your organisation.
The Academy will introduce KRisk’s Discovery process which is a value metric tool to facilitate the collection and analysis of information related to an individual’s risk intelligence. This risk information provides management and individuals with insight into how to better engage teams, encourage certain behaviours and ultimately improve risk and resilience management performance across the organisation. Each delegate will undergo the Discovery process and receive their own individual profile to help give an insight into their personal perception of risk, values and motivations, enabling them to better predict and support behaviours in any situation - especially the dynamics in a major incident or a prolonged period of stress.
As risk culture has such an importance in the success and resilience of an organisation, we will dedicate the majority of day two of the Risk and Resilience Academy to discussing its characteristics, how to measure it, and how to build a positive, proactive risk culture in your organisation. A better understanding of employees and what drives them will help improve strategy and achievement of objectives through people. It will ultimately allow organisations to maximise opportunities by supporting dynamic cultures, minimising threats, and identifying people risk hot spots.