In today’s post-pandemic world, a strong risk culture within your organisation is more important than ever. But risk profiles have changed significantly since COVID-19 hit. So, how do we define risk culture today, and why does it matter?
The benefits a robust risk culture can bring to your organisation, customers and team are far reaching – from more engaged and satisfied people to higher levels of agility and resilience in the face of change and challenges.
In the current volatile world climate, understanding what risk culture is, and enhancing its status within your organisation is an essential step for future success. So, to help get started, we’ve put together an overview plus tips and insights, to help you build a stronger risk culture in your workplace.
What is risk culture?
Broadly, risk culture refers to the mindsets and behaviours that determine how your people and organisation identify and manage risks. According to the Australian Prudential Regulation Authority (APRA) a widely accepted definition of risk culture is:
‘the norms and traditions of behaviour of individuals and of groups within an organisation that determine the way in which they identify, understand, discuss and act on the risks the organisation confronts and the risks it takes.’
Why is risk culture important?
From the definitions above, it’s clear that your organisation’s risk culture has the potential to shape not only how you respond to risks, but also your aptitude and willingness to take risks to grow your business. Organisations with a mature risk culture will generally fare better in tough times, as they are able to respond with wisdom and agility in the face of big challenges. When your team is on the same page, and has confidence in a strong risk culture they can lean on when needed, the result is a more resilient, cohesive and flexible business.
How has the pandemic impacted risk culture?
Globally, the pandemic has changed life as we know it, and in many workplaces the effects of the constant changes and uncertainty have negatively impacted the people and the culture. In the face of dramatic changes to operations, supplier interruptions, closures, and health and safety concerns, it’s no wonder the risk culture in many organisations has taken a hit.
Management have often been forced to move fast to mitigate threats and take advantage of opportunities, bypassing the usual processes and controls to deliver a rapid response. This has lowered confidence in processes and created an understandably anxious state among many workers. The flow-on of this is that naturally the appetite for risk and the confidence in managing risk is at a low point for many, as they shift into a more cautious and defensive way of operating.
What can we do to rebuild a healthy risk culture today?
When rebuilding a robust risk culture that will take your organisation forward, you’ll first need to understand the current state of your risk culture as it stands. From there, identify the biggest concerns of your people and work from the ground up. In the face of the ongoing challenge of living through the pandemic, supporting the wellbeing of your staff to boost morale and confidence should be a priority and is a good first step in building a positive risk and organisational culture. Although this time of change is hard, it also presents a wonderful opportunity to shape the culture and make positive changes. Setting up the right risk management systems and processes is essential, as it will provide you with an effective framework and a structure for assessing and managing risks that your team can rely on.
Take the first step in rebuilding your risk culture today
Whatever your current risk culture looks like, with the right tools, systems and mindset, you can turn it around. However, keep in mind that building your risk culture is not a one-off task – to maintain it at a healthy level in times of stress, change, and when times are good, a proactive approach and ongoing attention is required.