ABC of risk culture. Dr David Hillson

Copyright © 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
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What is culture?
What is culture?
AGRICULTURE
HORTICULTURE
VITICULTURE
SYLVICULTURE
…etc…
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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)
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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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
ATTITUDE
BEHAVIOUR
CULTURE
FORMS
SHAPES
INFLUENCES
INFLUENCES
The A-B-C Model
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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
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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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
FORMS
SHAPES
INFLUENCES
INFLUENCES
The A-B-C Model
ATTITUDE
BEHAVIOUR
CULTURE
for risk
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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
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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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…”
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
ATTITUDE
BEHAVIOUR
CULTURE
FORMS
SHAPES
INFLUENCES
INFLUENCES
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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
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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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
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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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
RISK
SEEKING
RISK
AVERSE
RESPONSETOUNCERTAINTY
Risk attitude spectrum
–
+
RISK
TOLERANT
RESPONSETOUNCERTAINTY
–
+
All images from FaceTrace™
© Copyright BrainJuicer 2006
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Three key characteristics
Risk attitude is variable
Risk attitude is chosen
Risk attitude can be managed
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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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?
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FINAL THOUGHTS
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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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
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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ABC of risk culture. Dr David Hillson

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