Risk culture is defined as your employees' behaviors, perceptions, attitudes, values, capabilities, and commitment in relation to risk in the workplace.
But what makes a successful risk culture?
There are a variety of factors that contribute, but I’ve observed at least 5 common characteristics of strong risk cultures. Identifying those components is the first step to building or improving your organization's risk culture.
Successful corporate culture starts with a vision. In the words of Yankees legend Yogi Berra, "If you don't know where you're going, you'll end up someplace else." Likewise, it's impossible to build a risk culture in your organization if everyone has a different idea of what that should look like.
Successful organizations, on the other hand, take the time to define a clear vision of the future and criteria for success. This vision guides the company's leaders and, in turn, its employees.
The next element of successful risk cultures is leadership support. Your risk culture, like the rest of your corporate culture, is built from the top down -- and we're not just talking about your EHS or risk director. Leaders at all levels of your company must understand the value of risk management and the consequences of not embracing a risk management approach.
The good news is that organizational risks are already on most executives' radars. In fact, Forbes Insight and Deloitte found that 26% of executives think the responsibility for overall risk management belongs to the chief executive officer, while 23% think the responsibility lies with the CFO or treasurer.
Of course, risk leaders can't attain their goals without the support of their employees. In a strong risk culture, all employees are "risk managers". Workers across the company take ownership for identifying and mitigating risks. To that end, the most successful companies make sure that their employees have the resources they need to succeed with risk management.
Data-driven decision making
In a strong risk culture, decision makers don't rely on guessing or "gut feelings". Instead, they use data analytics extensively to guide decision making. Data analytics plays a leading role in setting goals, measuring progress, and prioritizing actions.
Effective risk cultures also acknowledge the importance of standardizing data across the organization -- say, with a risk register -- in order to enable decision makers to share a common language around corporate risks.
Too often, organizations expect employees to participate in risk management, but fail to provide them with the tools to do so. Companies committed to building a risk culture make a point of ensuring that their employees have the appropriate risk management software and resources.
Importantly, these tools must be user-friendly, easily accessible, and integrated with the other tools being used across the company.
Your next steps
Identifying and understanding the components of a strong risk culture is the first step in improving your company's risk culture. Now that you know the five characteristics of a strong risk culture, take our quiz "How Strong is Your Risk Culture?" to see how your organization measures up.