What is Risk Culture?
Risk culture is a concept that describes how a group of individuals with a common goal shared values, beliefs, knowledge, attitudes, and understanding of risk. This applies to all organisations, including private businesses, government agencies, and non-profits. Employees’ general understanding, attitudes, and actions regarding risk and managing risk inside the firm are all part of risk culture. The extent to which a company’s risk management policies and procedures have been implemented is measured by its risk culture.
Example of Risk Culture
Risk culture is an element of risk management that can’t be controlled directly because it is embedded in an organisation’s culture. The types of risk culture include risk tolerance, checks and balances, risk awareness, due diligence and resilience. A specific example of risk culture is being vigilant of its surroundings and following a code of ethics. Employees should be aware that if there’s anything wrong around them (possibly a fraud), they should come forward and report it to concerned authorities.
Why is risk culture influential?
Because it represents the shared values, goals, practices, and reinforcement mechanisms that embed risk into an organisation’s decision-making processes and risk management into its operating operations. Risk culture is a glue that holds all parts of risk management architecture together.