What You Risk by Ignoring Risk Culture

A robust risk culture at a financial institution is critical to ensuring the organization operates in a safe, sound, and ethical manner. At the same time, it helps an organization stay aligned with its objectives, values, and principles—and deliver value to stakeholders including customers, employees, investors, and regulators.

Not surprisingly, risk culture and work culture are intertwined—after all, an unhealthy work culture can pose an undeniable risk to an organization. The RMA Journal recently explored the topic in an article called “Culture Matters.”

Here are some key takeaways:

• ‘Don’t ask’ cultures are a fast track to obsolescence. According to organizational psychologist Thomas Diamante, organizations need to be “adaptive and curious.” It’s important to foster an environment where opinions are freely shared and discussed. “There has to be expression internally so there’s learning going on all the time,” he said.
• Truly successful risk culture comes from the top down. Richard Vestuto, managing director of data insight and forensics for Kroll, said the board of directors, senior executives, and risk managers all play critical roles in shaping the risk culture of an organization. “CEOs can’t see everything, but they better be driving that down through the organization,” he said.
• Culture must be aligned with strategy. “Every employee wants to know what they’re contributing,” said Priya Dixit Vyas, a partner at Heidrick & Struggles with a focus on culture shaping. “There is a clarity around strategy—people understand it in the simplest way possible.”

Read the complete article at The RMA Journal.