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Manage Culture to Manage Risk


Manage Culture to Manage Risk

Alistair Hodgett shares an article that dives into an ongoing concern: the role of culture in managing national risk.

 Public Policy, the independent think tank, have published an important piece of research into the structures and processes that allow countries to identify, analyse and mitigate complex threats and potentially adverse developments. Intended to contribute to the strengthening of Ireland’s national risk management strategy, a summary and a download of the full report are available here.

 Largely missing from the scope of the research is an examination of the role of culture on the management of risks. In their conclusion, the authors do note that:

 “…it is widely accepted that while organisational changes are important, developing an appropriate “culture” is also critical. In this context, reforms can gain wider acceptance if they are seen to be addressing particular weaknesses. As one example, given Ireland’s recent experience, it would seem essential to put in place specific mechanisms aimed at preventing the emergence of “group think” and a “cosy consensus”

 Changes to process and structure are not sufficient to foster and allow the desired improvements in identifying and evaluating risk: a robust risk culture must also exist in which “the norms of behaviour for individuals and groups within an organisation determine the collective ability to identify and understand, openly discuss and act on the organisation’s current and future risks” (source: FSB/IIF, cited by Central Bank of Ireland, Risk Appetite Discussion Paper 2014).

Key points include:

 ●  The level of tolerance for communication about risks and fear of bad news

●  Valuing consensus over challenge (as cited by the Public Policy report)

●  Slow or insufficient responses to risks once identified

Read the full article, The essential role of culture in managing national risk, on Linkedin.