What is Risk Culture?
A risk intelligent culture is one where everyone understands the organisation’s approach to risk management, takes personal responsibility to manage risk in everything they do, and encourages others to follow their example.
As culture is becoming a key focus for several supervisors, there is increasing international regulatory pressure for organisations to get their risk culture right, and this includes how it is measured, monitored and tracked. That's where MI comes in.
What is Risk Culture MI and why is it important?
Risk culture measurement metrics have enabled some Boards and executive teams to develop a sense of control over their organisation’s culture, despite culture remaining an intangible construct.
Recognising that culture change is a journey, to be truly beneficial, risk culture profiles should provide a clear view of where there are risk culture ‘hotspots’ of concern that need strengthening, as well as identification of ‘sweet-spots’ to be leveraged and spread throughout the organisation.
Good practice risk culture MI is to measure and monitor risk culture in a way that reflects the current position across the organisation’s population demographics with both qualitative and quantitative insights whilst providing a comparison to leadership's desired or target risk culture vision, with also consideration for industry best practice.
How to develop Risk Culture MI for your organisation
In this article, we'll give some top tips and considerations for developing your risk culture MI based on how several organisations have achieved success from measuring and monitoring their risk cultures in the context of the organisation’s purpose, values, overall strategy and existing governance reporting structure. We explore further in this article, but here are some example tips:
- Ensure there are links to the organisation’s risk culture vision statements
- Best practice is to use a Risk Culture framework to anchor
- Commentary is key: Qualitative overlay ensures that metrics are contextualised and explained
- Ensure clear presentation and tailoring to the audience
- Include relevant trend analysis for the organisation to support the metrics
It is essential that Boards and executives start acting now to get their Risk Culture MI right. It can provide such powerful insight and enable targeted actions to drive the risk culture in the desired direction.