In this series of five articles, we have explored the importance of risk culture, distinguished the risk culture from the organisational culture, looked at the drivers for good and bad cultures, discussed the measurement of culture, looked at the symptoms of a sickly risk culture and now we are drawing some conclusions. Links to the other articles in the series can be found at the foot of this page.
In this series of articles, I have looked at the background of 300 years of failure, the tensions between long and short-termists, some of the issues in measuring your culture and the symptoms that you should be looking out for. In this final part of this series, I am drawing some simple conclusions.
I was staggered to read on the Corporate Governance at LSE website the following statement:
“Like many policy makers, over the last few years the FMG has mainly concerned itself with addressing governance issues prevalent in the UK, Europe and the US. Now that the governance framework has improved dramatically, with the most pressing issues to the developed world having been addressed, we believe that the challenge is to now turn the debate global.”
The bold typeface is mine. If it has done nothing else, Volkswagen has wholeheartedly shown that this was incredible false optimism. And Volkswagen will not be the last corporate scandal that we will see.
It is high time that we reinforced some key concepts:
- Risk Control is not the same as Risk Management. Risk Control is simply Internal Control rebranded. Risk Management is about dealing with the future.
- Risk Culture is not just an integral part of the organisational culture. The organisational culture is made up of the accretions of past activities and is firmly rooted in the past. The risk culture is about dealing with the multiple futures of the organisation and managing them to best advantage. Those stuck in the past are unable to survive and will fail. And yet those that only live in the future will fail in the present.
- Those that live in the past with strong organisational cultures but fail to recognise the future because of weak risk cultures will develop problems because they have a high need for control that prevents them from undertaking change meaning that they will die out like the dinosaurs that they have become.
I am suggesting that risk management needs to be about multiple futures and managing them to best advantage. This is not a simple internal control issue, but rather it is a strategic necessity. It implies a need to move away from the sole focus on today’s issues to a balanced look at today’s AND tomorrow’s concerns. This demands a healthy and vibrant risk culture as well as a good organisational culture for dealing with today’s issues.
We are able to use our technology-enabled approach to identify and analyse Risk Conversations which in turn will help organisations to move forwards towards a vibrant, healthy risk culture. Run a Risk Conversations CT Scan for your organisation before it is too late and the cancerous tissues have spread throughout the organisation.
The rest of this series can be found here:
- Part 1: 300 years of failure
- Part 2: Long term versus short term
- Part 3: Measuring your culture
- Part 4: Signs of problems
If you would like to find out more about Risk Conversations, then contact us here.