Key Elements of a Strong Risk Culture

Risk culture is the set of shared beliefs, attitudes, and understanding among a group, usually in a corporate environment, about risk and risk management practices.

A company has a strong risk culture when all employees understand the business and regulatory landscape in which the organization functions, and what risks are acceptable within that landscape to achieve business objectives. Companies that put enterprise risk management (ERM) strategies in place are one step closer to achieving a strong, risk-aware culture.

According to a 2012 study from the Institute of Risk Management, your organization has reached optimal risk maturity when it displays the following 10 indicators:

• Consistent guidance from key leaders on risk-taking
• Commitment to ethical decision-making
• Wide acceptance of the importance of risk management
• Transparent risk information flow across all departments
• Encouragement of reporting risk issues to regulators
• Learning from impacted risks
• Incentives for risk-taking
• Active and accessible training for risk management skills
• A well-resourced risk management function (staffing, funding, investment, and so forth)
• A readiness to challenge the status quo when warranted

What Determines Risk Culture?

Since risk culture is an environment cultivated internally by staff and employees, you will need to measure culture regularly to understand the overall perceptions of risk and the importance of risk culture. You can understand the current state of your organization’s risk culture in a few ways.

• Conduct internal surveys, asking participants how they believe risk culture should operate within the organization.
• Conduct focus groups, with representatives from each department and senior management.
• Ask key stakeholders to report back on staff attitudes and understanding of risk and risk management.

It’s important to understand how risk culture develops within your organization because poor risk culture doesn’t only mean an imbalanced corporate structure, where leadership can run unchecked and other departments are left disgruntled. A lack of risk awareness and understanding also leaves your company vulnerable to increased cyber-attacks.

How Do You Build a Strong Risk Culture?

According to the Institute of Risk Management, risk culture is the result of attitudes and behaviors toward risk. In addition to soft risk management skills, you’ll also want to support more concrete skills like information technology security training and understanding of potential cyber-attacks.

Risk Attitudes and Behavior Create a Strong Risk Culture

ERM can include the attitude toward risk within an organization. A positive risk attitude will embrace some risks to reach business objectives. It may also acknowledge and respond to cybersecurity risks with security solutions rather than panic or passive acceptance.

Risk behavior should not be confused with risky behavior. Risk behavior is the set of actions an organization takes to engage with risk. For example, a company could draft a risk appetite statement to indicate its desired risk culture and risk management framework; that is a positive risk behavior. Employee behavior can have a big effect on risk behavior, as senior management can guide a positive understanding of appropriate risk within their teams, helping individuals to engage with risk decisions in a safe manner.

These two components – attitude and behavior – combine to create the corporate culture of a company. Effective risk culture comes from a positive risk attitude and managed risk behavior. Those elements are what senior management should gauge when looking to create cultural change.

Build a Cybersecurity Culture

Strong risk culture applies to all aspects of a company’s operations, including the management of its digital assets. Building up cybersecurity regulatory protocols helps to foster a strong risk culture by showing employees how the technology they use daily is tied to risk. For this reason, risk governance initiatives should include cyber risk management frameworks.

Integrate ZenGRC into Your Risk Culture Strategy

By implementing a digital cybersecurity dashboard, you’ll have access to the metrics and benchmarks you need to help build a strong risk culture within your organization. ZenGRC from Reciprocity provides streamlined tools for regular risk assessments and sharing reports with stakeholders to improve risk decisions. Our cybersecurity experts will guide you through building your risk management framework every step of the way.

Schedule a call or demo with ZenGRC today.