Culture’s at core of best practice risk management

As every organisation knows, when you move in a strategic direction, your travelling companion is invariably risk.

That’s the irrefutable ying and yang of the strategy process.

But what the really successful organisations also know is that planning is but one of the elements required to effectively manage risk. They know only too well – and subscribe to – the truism that even the best laid plans of mice and men can, and often do, go awry.

And they appreciate that the key piece in any organisation’s risk management puzzle is its culture. Get that right and you’re well on your way.

Don’t get me wrong, planning is a fundamental element and good boards routinely prepare and approve carefully considered and robust risk management plans, policies, procedures, registers and other standard methodologies.

They also ensure that the risk management suite is kept current and the risk register regularly updated. Some organisations even go to the extent of preparing a colour-coded ‘heat register’, with dangerous risks in red and those of a more benign nature in green.

We certainly need these as they provide us with a vision of what could happen, the likelihood of it happening, the potential consequences should it happen and an understanding of what mechanisms are in place – or need to be in place – to control and deal with risks.

But let’s be utterly candid here: they are not an organisation’s best risk alleviators. Indeed, chances are they will quickly be rendered barren if those in the organisation don’t take notice of and buy into them.

By way of example – and I’m happy to name and give kudos to the company concerned – I recently visited the Adelaide office of Bendigo Adelaide Bank and was bowled over by the culture. It was positively palpable the moment I entered the building, flying in the face of every preconceived notion I’ve ever held about a bank. The people at reception were warm, friendly and chatty and this mood permeated the building, up to and including senior management who had none of the superiority stuffiness we expect to find in these institutions.

People were smiling; it was so refreshing, so contagious.

And unsurprisingly, Bendigo Adelaide Bank is performing very well, thank you!

Contrast this with the offices – no names, no pack drill – of some of the big commercial law firms in this country. They may have fantastic city offices with spectacular views but they’re sterile, haughty and pompous, to the point where even the young receptionist is superciliousness personified.

I know which organisation I’d prefer to be with when it comes to effectively managing risk.

How about you?

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2 thoughts on “Culture’s at core of best practice risk management

  1. Hi Kate,
    Do you feel a little better after that culture comparrison?
    Just to let you know that I always read your GM Blogs and this time had a bit of chuckle.
    HASSELL were the architects and designers of the BAB fit-out and continue to do good work for them across the country in providing the right environment to help change their working style to activity based working (ABW).
    Many of our clients have embraced ABW, but as you can well imagine law firms with all those space hungry boxes (cellular offices) will be the last to change.
    I suspect that it will take at least another generation for legal practice to change their ways, as the culture is endemic from university education right through to the senior judges.
    Our Prime Minister, Tony Abbott, might think that the age of entitlement is over, but the lawyers won’t have a bar of it. (intended pun)
    We should catch up for a coffee sometime soon.
    Cheers,
    Mark Coventry

  2. So very true.

    It’s interesting that many directors and senior execs still think of culture as something a bit “warm and fuzzy” that might be attended to after all the other “important” things have beed done.

    There are now such strong links between culture and organisational performance, that it should now sit as an indicator alongside the other more common indicators of performance and risk.

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