More Related Content Similar to ABC of risk culture. Dr David Hillson (20) More from Association for Project Management (20) ABC of risk culture. Dr David Hillson1. Page 1Copyright © 2009-2019 The Risk Doctor Partnership
The A-B-C of Risk Culture
Dr David Hillson, The Risk Doctor
© Copyright 2009-19, The Risk Doctor Partnership, Slide 1
The A-B-C of
risk culture
Presented by
Dr David Hillson
CFIRM, PMI Fellow, HonFAPM
The Risk Doctor
david@risk-doctor.com
The Risk Doctor Partnership
www.risk-doctor.com
© Copyright 2009-19, The Risk Doctor Partnership, Slide 2
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2. Page 2Copyright © 2009-2019 The Risk Doctor Partnership
The A-B-C of Risk Culture
Dr David Hillson, The Risk Doctor
© Copyright 2009-19, The Risk Doctor Partnership, Slide 3
What is culture?
© Copyright 2009-19, The Risk Doctor Partnership, Slide 4
What is culture?
AGRICULTURE
HORTICULTURE
VITICULTURE
SYLVICULTURE
…etc…
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3. Page 3Copyright © 2009-2019 The Risk Doctor Partnership
The A-B-C of Risk Culture
Dr David Hillson, The Risk Doctor
© Copyright 2009-19, The Risk Doctor Partnership, Slide 5
What is culture?
Culture is…
“…the collective programming of the mind which distinguishes
the members of one group … from another” (Geert Hofstede)
“…a pattern of shared basic assumptions that the group learned
… that has worked well enough to be considered valid … passed
on to new members as the correct way to perceive, think, and
feel…” (Edgar Schein)
“… the set of important understandings (often unstated) that
members of a community share in common” (Vijay Sathe)
“…what happens when the boss leaves the room” (René Carayol)
© Copyright 2009-19, The Risk Doctor Partnership, Slide 6
What is culture?What is (risk) culture?
IRM reports, 2012
[https://www.theirm.org/what-we-say/thought-leadership/risk-culture/]
Risk culture: Resources for Practitioners
Risk culture: Guidance for Boards
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4. Page 4Copyright © 2009-2019 The Risk Doctor Partnership
The A-B-C of Risk Culture
Dr David Hillson, The Risk Doctor
© Copyright 2009-19, The Risk Doctor Partnership, Slide 7
A working definition
Culture is
“the values, beliefs, knowledge and
understanding, shared by a group of
people with a common purpose”
(IRM/Hillson, 2012)
Note 1: Different groups, each with own culture
Organisation, Project Board, project team…
Note 2: All internal, invisible, tacit, hidden…
How to measure, monitor, modify, manage…?
Where does culture come from?
The A-B-C Model
© Copyright 2009-19, The Risk Doctor Partnership, Slide 8
ATTITUDE
BEHAVIOUR
CULTURE
FORMS
SHAPES
INFLUENCES
INFLUENCES
The A-B-C Model
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5. Page 5Copyright © 2009-2019 The Risk Doctor Partnership
The A-B-C of Risk Culture
Dr David Hillson, The Risk Doctor
© Copyright 2009-19, The Risk Doctor Partnership, Slide 9
Where does culture come from?
Culture is formed by repeated Behaviour
Behaviour is shaped by underlying Attitudes
Both Behaviour and Attitudes are influenced
by prevailing Culture
Cyclic interdependencies
Vicious circle
Virtuous circle
© Copyright 2009-19, The Risk Doctor Partnership, Slide 10
Defining A & B (& C)
Attitude : the chosen position adopted by an
individual or group in relation to a given
situation, influenced by perception
Behaviour : external observable actions,
including decisions, processes,
communications etc.
Culture : the values, beliefs, knowledge and
understanding, shared by a group of people
with a common purpose
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6. Page 6Copyright © 2009-2019 The Risk Doctor Partnership
The A-B-C of Risk Culture
Dr David Hillson, The Risk Doctor
© Copyright 2009-19, The Risk Doctor Partnership, Slide 11
and now for risk…
Attitude : the chosen position adopted by an
individual or group in relation to a given
situation, influenced by perception
Behaviour : external observable actions,
including decisions, processes,
communications etc.
Culture : the values, beliefs, knowledge and
understanding, shared by a group of people
with a common purpose
Risk behaviour : external observable risk-related
actions, including risk-based decision-making, risk
processes, risk communications etc.
Risk attitude : the chosen position adopted
by an individual or group in relation to risk,
influenced by risk perception
Risk culture : the values, beliefs, knowledge
and understanding about risk, shared by a
group of people with a common purpose
© Copyright 2009-19, The Risk Doctor Partnership, Slide 12
FORMS
SHAPES
INFLUENCES
INFLUENCES
The A-B-C Model
ATTITUDE
BEHAVIOUR
CULTURE
for risk
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7. Page 7Copyright © 2009-2019 The Risk Doctor Partnership
The A-B-C of Risk Culture
Dr David Hillson, The Risk Doctor
© Copyright 2009-19, The Risk Doctor Partnership, Slide 13
First principles arising from A-B-C
A & C are invisible, only B is observable
A is not C
Risk culture is not “risk-averse” or “risk-seeking”
B is not C
Risk culture is not “the way we do things round here”
Risk culture has components
Values, beliefs, knowledge, understanding
Based on individuals, but also for groups
Risk culture exists at multiple levels
Different “groups with common purpose”
Should be coherent and aligned
ATTITUDE
BEHAVIOUR
CULTURE
FORMS
SHAPES
INFLUENCES
INFLUENCES
© Copyright 2009-19, The Risk Doctor Partnership, Slide 14
Why does risk culture matter? (1)
Compliance requirement
ISO31000:2018
“Management should ensure that the organization's
culture and risk management policy are aligned.”
“[Continuous improvement decisions] should lead
to improvements in the organization's management
of risk and its risk management culture.”
Standard & Poor’s:
“A company’s risk management culture is the
foundation for its ERM processes.”
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8. Page 8Copyright © 2009-2019 The Risk Doctor Partnership
The A-B-C of Risk Culture
Dr David Hillson, The Risk Doctor
© Copyright 2009-19, The Risk Doctor Partnership, Slide 15
Poor culture can cause [has caused] failure
Walker Report (2009) – corporate governance
“The principal emphasis is in many areas on
behaviour and culture…”
UK Financial Reporting Council (2011) – global
financial crisis
“The issues with which companies were grappling
include understanding their exposure to risk and
how this might change … [and] embedding the right
risk culture throughout the company…”
Why does risk culture matter? (2)
© Copyright 2009-19, The Risk Doctor Partnership, Slide 16
Affects risk management effectiveness
IRM (2012)
“The prevailing risk culture within an organisation
can make it significantly better or worse at
managing risks.”
Influences risk attitude & risk-taking behaviour
Too much or too little
Vicious or virtuous cycles
Why does risk culture matter? (3)
ATTITUDE
BEHAVIOUR
CULTURE
FORMS
SHAPES
INFLUENCES
INFLUENCES
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9. Page 9Copyright © 2009-2019 The Risk Doctor Partnership
The A-B-C of Risk Culture
Dr David Hillson, The Risk Doctor
© Copyright 2009-19, The Risk Doctor Partnership, Slide 17
What is “good” risk culture? [IRM, 2012]
Ten indicators:
1. Distinct and consistent tone from the top on risk-taking
2. Commitment to ethical principles & practice
3. Wide acceptance of importance of managing risk
4. Transparent and timely risk information flow up & down
5. Risk reporting and whistle-blowing is encouraged
6. Active learning from impacted risks and near-misses
7. Risk-taking behaviours rewarded or challenged
8. Risk mgt skills are valued, encouraged & developed
9. Properly resourced risk management function
10.Regular challenging of status quo from diverse perspectives
© Copyright 2009-19, The Risk Doctor Partnership, Slide 18
Developing risk culture (1)
Gap analysis – cultural diagnostics
1. Where are we now?
2. Where do we want to be?
3. What needs to change?
4. Design & implement risk culture change programme
5. Where are we now? (repeat from Step 1)
Consider components of risk culture
IRM Risk Culture Aspects Model
Assess against each aspect/element
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10. Page 10Copyright © 2009-2019 The Risk Doctor Partnership
The A-B-C of Risk Culture
Dr David Hillson, The Risk Doctor
© Copyright 2009-19, The Risk Doctor Partnership, Slide 19
IRM Risk Culture Aspects Model
Four main aspects, each with two elements
1. Tone at the top
Risk leadership, clarity of direction
How organisation responds to bad news
2. Governance
Clear accountability for managing risk
Transparency and timeliness of risk information
3. Decision-making
Well informed risk decisions
Reward appropriate risk-taking through performance mgt
4. Competency
Status, resourcing and empowerment of risk function
Embedding of risk skills across organisation
© Copyright 2009-19, The Risk Doctor Partnership, Slide 20
IRM Risk Culture Aspects Model
TONEATTOP
Risk leadership
Dealing with
bad news
GOVERNANCE
Accountability
Transparency
DECISIONS
Informed risk
decisions
Reward
COMPETENCY
Risk resources
Risk skills
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11. Page 11Copyright © 2009-2019 The Risk Doctor Partnership
The A-B-C of Risk Culture
Dr David Hillson, The Risk Doctor
© Copyright 2009-19, The Risk Doctor Partnership, Slide 21
Developing risk culture (2)
Could just try to change Behaviour
But Behaviour is influenced by both
Attitudes and Culture
Hard to produce lasting change
Based on A-B-C Model
Manage Risk Attitudes to influence
Risk Behaviour & build new Risk Culture
ATTITUDE
BEHAVIOUR
CULTURE
FORMS
SHAPES
INFLUENCES
INFLUENCES
START
HERE
© Copyright 2009-19, The Risk Doctor Partnership, Slide 22
RISK
SEEKING
RISK
AVERSE
RESPONSETOUNCERTAINTY
Risk attitude spectrum
–
+
RISK
TOLERANT
RESPONSETOUNCERTAINTY
–
+
All images from FaceTrace™
© Copyright BrainJuicer 2006
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12. Page 12Copyright © 2009-2019 The Risk Doctor Partnership
The A-B-C of Risk Culture
Dr David Hillson, The Risk Doctor
© Copyright 2009-19, The Risk Doctor Partnership, Slide 23
Three key characteristics
Risk attitude is variable
Risk attitude is chosen
Risk attitude can be managed
© Copyright 2009-19, The Risk Doctor Partnership, Slide 24
How do you think about risk?
Values, beliefs, knowledge, understanding
Risk is avoidable/natural
Risk is bad/good
“High risk” means dangerous/exciting
Risk should be prevented/exploited
Risk management protects/enhances value
Risk should be managed by specialists/everyone
Discussing risk shows weakness/maturity
…
How can you change your thinking?
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13. Page 13Copyright © 2009-2019 The Risk Doctor Partnership
The A-B-C of Risk Culture
Dr David Hillson, The Risk Doctor
© Copyright 2009-19, The Risk Doctor Partnership, Slide 25
Awareness & Appreciation
of current risk attitude
and its implications on
risk behaviour & risk culture
Managing risk attitude:
The Six As Framework
Assertion
& Action
Intervention
required
Acceptance
Intervention
not required
The Six As Framework is copyright © 2008
David Hillson & Ruth Murray-Webster
Monitor&review
Monitor&review
Assessment
OK or not?
© Copyright 2009-19, The Risk Doctor Partnership, Slide 26
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14. Page 14Copyright © 2009-2019 The Risk Doctor Partnership
The A-B-C of Risk Culture
Dr David Hillson, The Risk Doctor
© Copyright 2009-19, The Risk Doctor Partnership, Slide 27
FINAL THOUGHTS
© Copyright 2009-19, The Risk Doctor Partnership, Slide 28
Why does (risk) culture matter?
Self-expression questions:
Who are we? What are we expressing?
Growth questions:
How will we grow to maturity? What are we reproducing?
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15. Page 15Copyright © 2009-2019 The Risk Doctor Partnership
The A-B-C of Risk Culture
Dr David Hillson, The Risk Doctor
© Copyright 2009-19, The Risk Doctor Partnership, Slide 29
So what ?!
A-B-C Model links attitude & behaviour to culture
Vicious or virtuous cycles
Risk culture matters
Drives risk thinking and risk-taking behaviour
Inappropriate risk culture can cause problems
Take too much or too little risk
Assess risk culture using IRM Risk Aspects Model
Change risk culture by managing risk attitude
Take the right risks safely success!
RISK
ATTITUDE
RISK
BEHAVIOUR
RISK
CULTURE
FORMS
SHAPES
INFLUENCES
INFLUENCES
© Copyright 2009-19, The Risk Doctor Partnership, Slide 30
For further information
Dr David Hillson
The Risk Doctor Partnership
+44(0)7717.665222
david@risk-doctor.com
www.risk-doctor.com
YouTube.com/RiskDoctorVideo
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