How Does Risk Culture Affect Risk Management

How does risk culture of an organisation impacts the success or failure of a project? With reference to the case study, make recommendations on how to integrate risk management with organisational risk culture.

Understanding Culture: “Culture is a collective programme of the mind which distinguishes the members of one group or category of people from another. ‘’ (Hofstede, 1980)

Risk culture Definition: it’s a system of values and behaviours present in the organisation that shares risk decisions of management and employees. One element of risk culture is a common understanding of an organisation and its business (Hillson, 2013; Cindy Levy, February 10; Levy, et al., February 2010).

Risk culture is also the values, beliefs, knowledge and understanding

• “The principal emphasis is in many areas on behaviour and culture…” (Walker,2009)

Risk Culture affects risk management in the following ways:

• Risk culture affects risk appetite, including strategic and tactical decisions on how much risk to take in range of situations and settings.

• Risk culture influence attitudes towards risk, shaping the way individual and groups positions themselves towards risk in situations that are perceived as risky and important.

• Risk culture informs the settings of objectives and strategies, as key decisions-makers seek to determine the optimal course in an uncertain environment and context.

• Risk culture determines the ability to ‘’take the right risk safely’’ because it influence the effectiveness of risk policies, procedures and practices.

• Risk culture can prevent the appearance of condoning wrong behaviours, which can arise when leaders send inconsistent messages on the level of acceptable

Senior managers need to agree on risk management framework, value of risk management, and their respective roles. They have to demonstrate their support by committing appropriate resources and sending appropriate messages throughout the organisation

• A common strategy and framework. Organizations must develop an integrated risk management strategy and framework across their business units and processes as a basis for developing a common language on risk and making consistent decisions in managing and taking risks. Organizations that do not spend enough effort on developing a framework are likely to end up with a fragmented approach to risk management: each business unit will likely develop its own approach to both implementing a risk management framework and responding to