Cultural risks on the rise

Ask 728 directors and C-level executives what the top risks are for 2018 and you’ll find two cultural risks among the top five.

That’s what Protiviti found in its most recent global survey:

  • Ranked at #2 is “resistance to change”, a significant concern given that the #1 risk is the “rapid speed of disruptive innovation and new technologies”.
  • Then, ranked at #5 is an “organizational culture that may not encourage the timely escalation of risk issues.”

In response, we would expect companies to invest mightily in measuring and improving their culture. Yet, there are no signs of that. Instead, we see billions invested in addressing other risks like big data, cyber threats and privacy. I’m not suggesting that these risks should be ignored. Rather, I believe we could spend significantly less, and address those risks faster, by getting our culture right at the same time.

When employees resist change and fail to escalate risks, they create a tremendous drag on the business. Companies that create the right culture will speed ahead of their competitors.


2 thoughts on “Cultural risks on the rise

  1. Thanks Yan. Much of the focus of risks and compliance is on rules based change. History will tell us that this just does not work to drive effective culture, which is not binary. As a conduct risk manager, I am saddened by traditional operational risk framework management for conduct. You cannot measure integrity or any behaviour for that matter with a metric. I have learned the quants are a starting point for further inquiry. My comments are also focused on the downside, which again the current focus of risk/compliance management is placed. Not time for seeking out good behaviour and promoting it to reinforce cultural expectations. Keep up the good work.

    Liked by 1 person

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