Corporate culture may be a hard-to-define concept but its tangible benefits are increasingly being recognised by business leaders, regulators and investors. An EY survey of FTSE 350 board directors found that 92% of respondents believe that investing in culture has improved their financial performance.
Corporate culture also has a significant impact on a company's risk management performance. The right culture, for example, encourages positive risk taking. Airmic members who have addressed organisational culture report benefits such as improved employee performance, a reduction in incidents and near-misses, and reduced regulatory issues.
Knowing how to influence corporate culture can be a challenge for businesses, however. The attitudes of employees can be hard to control, and culture is not something that can be imposed overnight via processes and procedures.
Traditionally the board and HR have led the debate on culture. However, according to a new guide to be published by Airmic this month, the risk manager can and should play an important role in influencing their organisation's corporate culture.
Corporate culture drives risk culture which in turn affect the beliefs and understanding of employees on organisational risk. It shapes their own risk responsibilities, and in particular their decisions on risk-taking. Airmic members are well-positioned to contribute to this discussion.
According to Airmic's 2016 pre-conference survey, over two thirds of members report a lack of embedded risk culture in their organisation as a top-three concern. Meanwhile many members said that despite them having regular access to the board and senior management, integrating risk management across the business units continues to be a major challenge.
With this in mind, we have produced a paper aimed at informing and guiding members on all aspects of corporate culture. It includes a framework for assessing culture by breaking it into seven key drivers, and guidance on how the risk manager can instil change. It has a strong practical dimension and includes a risk culture profiling tool, designed and shared by QBE, which members can use to assess their existing culture, and create an action plan to develop a positive culture.
Almost by definition, corporate culture cannot be changed by one person or one department; however, the risk manager is well equipped to sit at the centre of the discussion, collecting the relevant data and enabling the improvement process.
This is not an easy or overnight task, but our guide is the first of its kind that is tailor-made for risk managers. By addressing the impact of culture, Airmic members not only contribute to a successful organisation, but also demonstrate their value at a senior level in the business.
Georgina Oakes is research and development manager at Airmic, and co-author of the report The importance of managing corporate culture: The role of the risk manager, which will be published this month.