The attention focused on the determinants of, and influences on, risk culture has become progressively greater in recent years, thanks substantially to continuing autopsies of the 2008 global financial crisis. Yet, for all the discussion, there remains no universally agreed definition. Perhaps the most frequently cited example is the Institute of Risk Management's: "Risk culture is a term describing the values, beliefs, knowledge, attitudes and understanding about risk shared by a group of people with a common purpose, in particular the employees of an organisation."
This Perspectives piece highlights how while references to the concept of risk culture are relatively new, shortcomings in risk awareness and management have become identified as fundamental causal factors in recent world events, such as the global economic crisis and major industrial accidents.
Managing culture is not easy and attempts to shape culture are prone to unintended consequences. In particular, attempts to use incentive / reward systems as a silver bullet to control risk culture are ill-founded. While financial reward can play an important role in shaping risk culture it is important to realise that that a more holistic approach is needed to bring about a more robust and appropriate risk culture in most organisations.
This paper is a summary of a chapter on risk culture contributed by the authors in the recently published book 'Enterprise Risk Management: A common framework for the entire organization', published by Elsevier.