Risk culture is at the heart of human decisions that govern the day-to-day activities of your organization. When it goes wrong, as in the SocGen rogue trading scandal in 2008 or the Boeing scandal in 2018 may have devastating and even fatal consequences. Failures such as fraud, collapse of the complexe derivatives positions, compliance or safety breaches, operational disasters, and even over-leveraging have their origin in flaws in unique organizational cultures that allowed particular risks to take root and grow.

1. Risk Culture. At The Heart Of Your Decisions
Risk culture is at the heart of human decisions that govern the day-to-day
activities of your organization. When it goes wrong, as in the SocGen rogue
trading scandal in 2008 or the Boeing scandal in 2018 may have devastating and
even fatal consequences.
Failures such as fraud, collapse of the complexe derivatives positions,
compliance or safety breaches, operational disasters, and even over-
leveraging have their origin in flaws in unique organizational cultures
that allowed particular risks to take root and grow.

2. Risk Culture. How Is It Shown?
● The way organization conducts its business, treats employees, customers
and the wider community.
● The extent to which freedom is allowed in decision making developing
new ideas and personal expression
● How power and information flow through its hierarchy
● How employees are committed towards collective objectives
How decisions are taken at all levels.
Organizational culture..
Eats strategy every day

3. Risk Culture. Not Respected! (Wells Fargo 2016)
● Wells Fargo employees secretly opened unauthorized accounts to hit
sales targets and receive bonuses
● Bank employees opened over 1.5 million deposit accounts that may not
have been authorized
● Employees submitted applications for 565’443 credit card and accounts
without their customers knowledge or consent.
5’300 Wells Fargo employees fired. $ 185 million in fines, along with $ 55
million refund to customers.

4. Risk Culture. Not Respected! (DaimlerChrylser 2007)
● The Daimler-Chrysler merger was called the ‘merger of equals’. A few
years later it was called the ‘fiasco’.
● The German culture became dominant and employees satisfaction levels
at Chrysler dropped off the map.
● A joke circulating at Chrysler at the time was ‘How do you pronounce
DaimlerChrysler?’... ‘Daimler’ - the ‘Chrysler’ is silent.
By 2000 major losses were projected and, a year later, layoffs began. In
2007, Daimler sold Chrysler.

5. Risk Culture. Not Respected! (AML False Positives)
We gave a financial institution a three column document for a blind test on
transactions risk rating. We filled the first column with the most
representative types of transactions. In the second column Compliance gave
their risk rating. Finally the third column was filled with the transaction risk
rating, as this is calculated by the system. The results were amazing. In
more than 90% of the cases the system’s rating was different than
Compliance’s appreciation (risk sub-culture issues).
Banks & Financial Institutions waste millions per year.

6. AML False Positives. The Snowball Effect
A false risk appreciation at all levels, may produce a cascading and snowball
effect on the number of suspicious cases investigated daily by Compliance.
An inappropriate customer risk rating will trigger multiple suspicious
transactions and multiple irrelevant cases to investigate and most probably,
many relevant cases that are not triggered because of the wrong risk rating.
False risk measurement and algorithm limitations, produce a large
number of irrelevant cases.

7. Risk Culture. The Risk Onion
The rik culture onion reflects the influences on risk culture, beginning with the
predisposition to risk for the individual.
Risk sub-culture may have an overriding detrimental or positive affect on what
is believed to be the dominant risk culture.
Decision control at the personal level is crucial.

8. Risk Culture. The Importance Of Sub-Culture
Within every organization, dynamic sub-cultures will exist across business
units and teams
Understand who exerts the most influence over risk culture.
This is not always the most senior people in the organization.

9. Risk Culture. The Swiss Cheese Model
An effective risk culture and implementation can work to protect organizations
from process failure/neglect.
Risk Based Decision Support will be your ultimate control layer after all
processes and procedures have failed.
Risk Based Decision Support
Your Ultimate Control Layer

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