How to Build a Risk Reductant Company Culture


A company culture may be a shared system of values and practices that become blended with other norms and beliefs that send influential strategic messages to employees and stakeholders a few company’s attitudes and behaviors, by defining what’s important. It (a company culture) will emerge as management teams, boards, and employees come to acknowledge the beneficial (economic, competitive advantage) outcomes which will accrue as they engage and solve problems through a ‘company culture’ platform. (Adapted by Michael D. Moberly from the work of Dr. Edgar Shein)

A well oriented and nurtured company culture is an efficient tool for identifying and distinguishing the varied sorts of intangible assets that exist during a company and therefore the risks

A company’s (strategic) growth plans rely not just on the power to proportion numbers, but on maintaining things like quality, responsiveness, and product-service quality. If growth occurs by acquisition or if non-core opportunities are to be spun off, then all intangible areas require special attention-consideration by management teams, boards, and employees.

A first, and really important step toward developing a ‘risk intelligent company culture’ is recognizing that risk isn’t solely an external phenomena, i.e., all risk emanates from outside the corporate .

A second, and equally important step in developing a risk intelligent company culture comes from recognizing that company value are often favorably suffering from integrating – merging risk management and human resource management. The rationale for doing this lies within the incontrovertible fact that a big percentage of (company) risk actually evolves from – is inherently embedded in employee behavior and actions, which incorporates the management team and board also .

According to Deloitte’s, The People Side Of Risk Intelligence: Aligning Talent And Risk Management, risk touches virtually every aspect of employee (HR) management, and employees touch virtually every aspect of risk management. Is there no better reason to develop a risk intelligent company culture?

Effective risk management (and a risk intelligent company) Deloitte suggests, executes at the purpose at which there is a convergence of the following:

1. Risk Governance – how a corporation treats risk and assumes responsibility for risk oversight and strategic deciding 

2. Risk Infrastructure Management – how a corporation assumes responsibility for and understands the way to design, implement, oversee, and sustain a risk management program…

3. Risk Ownership – employees knowing what their risk responsibilities are, i.e., they assume (some) responsibility (ownership) for identifying, measuring, monitoring, and reporting risk…

In light of the economic incontrovertible fact that U.S. businesses lose an estimated 7% of their annual revenue to varied sorts of occupational fraud, a risk intelligent workforce (and, company culture) are often a really valuable (intangible) asset for a corporation , because one doesn’t need to look far to ascertain the adverse strategic consequences – affects on companies once they rely totally on ‘unwritten rules’ for a way things get done and the way , or if, risk is managed.

In a risk intelligent company (culture), management teams and boards assume an obligation to know what those ‘unwritten company rules’ are and the way they’re being interpreted-executed by employees. an honest start line is (a.) to critically assess a company’s ‘unwritten rules’ by getting answers to the subsequent questions, and (b.) recognizing the questions’ relevance insofar as how they’ll serve to influence and perpetuate a corporation environment of unmanaged risk taking:

1. What (employee) behaviors are literally being rewarded?

2. Are company (employee) incentives (properly, effectively) aligned with the company’s risk management priorities?

3. Do all employees, including the management team and board, understand the businesses risk management priorities, objectives, and therefore the strategic reasons-rationales behind them?

Ultimately, becoming more intelligent (and objective) about company risk is a crucial and necessary prelude to making a risk intelligent company culture wherein management teams and boards assume a responsibility for elevating and cultivating a company-wide awareness of risk that fosters risk intelligent behaviors in the least levels. It begins by:

1. Adopting a standard definition of risk in accordance with national standards and best practices.

2. Clearly defining roles, responsibilities, and authority (for managing risk) with appropriate levels of transparency.

Lastly, it is vital to acknowledge , insofar as developing a ‘risk intelligent company culture’ that (a.) a change in (company) culture generally follows a (employee) behavior change, and (b.) culture and behavior changes are less a product of formal risk policies, controls, and pronouncements, than they’re the results of effective incentives and rewards.

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