Special report
CULTURE
Getting to grips with culture Culture may be difficult to define and control, but regulators have put it squarely on the agenda for risk managers BY ALEX HINDSON
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nterprise risk management (ERM) has been under the spotlight since the 2008 financial crisis, particularly in the financial services sector. The question is often asked, where was ERM? This reflects a concern that the focus has been on implementing ERM processes but that it has failed to engage people’s hearts and minds. This has led to a significant increase in regulation, process and governance. There is however no guarantee that all this regulatory attention will drive a change in staff behaviours. This requires a change in risk culture. Culture in many ways is what staff in your organisation do when you are not watching them. It is values-based and ethically driven. You can create ever-stronger processes and controls, but if your staff do not understand or buy-in, these will only be paper thin and will probably not stand up to scrutiny in a future crisis. The Financial Reporting Council (FRC) has raised pressure by publishing Guidance on risk management, internal control and related financial and business reporting, which confirmed the board’s accountability for defining “the culture it wishes to embed in the company, and whether this has been achieved”. The FRC further anticipated that companies would provide information on progress in
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Culture in many ways is what staff in your organisation do when you are not watching them
Enterprise Risk
