RISK MANAGEMENT and CULTURE
Just as with families and communities, an entity's culture sets the tone for most activities and the organization's success. Cultures based upon transparency, trust and collaboration enable strong two-way communication, and understanding and belief in mission and strategies.
Risk is many times an implied and inherent element of an organization's culture and processes. For entities, risk is a critical component that empowers the ability to pursue their mission, strategies, and operations. Thus the risk posture should be clearly embedded within the culture and owned by all key stakeholders.
RISK AVERSE vs RISK AWARE CULTURE
Without specifically identifying and communicating the risk culture, key stakeholders may defer back to the base assumption that risk is more about defense and being careful (i.e., risk averse) vs. empowerment to achieve the objectives (i.e., risk aware). Ultimately, each organization either formally or informally decides upon their risk appetite and risk tolerance levels and these then impact most enterprise-wide decisions and processes.
The RISK TRANSPARENCY Risk Governance Framework (RGF) enables the integration of risk into the organizational culture and DNA via governance and tone at the top from the Board of Directors and Executive Leadership through all Functional Areas. The ability to both create and protect value is key to near and long-term organizational success and resilience.