The recent publication of the Institute of Risk Management (IRM) guidance on risk culture is very timely. As Carolyn Williams of the IRM states, “From BP to Barclays and from G4S to Kodak, the root cause of corporate meltdown is increasingly identified as problems with risk culture. We have more regulations, standards, codes and governance than ever before, but, while important, these are clearly not sufficient to ensure that the actual behaviour of individuals and teams is fully aligned with the organisation’s desired approach to risk.”
In the UK there is much current discussion on organizational culture, especially at the BBC and in the banking sector, after allegations against TV and radio personality, Jimmy Savile, citing sexual abuse stretching back decades; and at Barclays where senior executives had to leave after rate fixing was uncovered.
Each example raises two major cultural questions:
- what is the prevailing culture coming from the top down in organizations to employees – i.e. do employees feel that it’s accepted to do ‘this kind of thing’ round here
- does the culture support individuals speaking out when they feel something is wrong – i.e. do employees feel what’s going on isn’t right but think they won’t be listened to or penalized for speaking out
Even noticing that there might be a cultural issue is a enormous step forward – but it’s the major change management effort needed, that has to be funded and sustained over a number of years, which will really make the difference. There needs to be change management initiatives around culture, communication, processes and systems.
Active Risk’s white papers will help you clarify the issues and provide change management advice on how to make the risk management changes a reality:
We need to change from a ‘walk on by’ culture so that not only risks, but also business opportunities are identified early. Engaging all employees to improve both business ethics and business performance is vital in the current economic climate.
How is your organization managing cultural change?
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