The document discusses the significance of organizational culture and risk awareness in achieving business success, emphasizing that effective culture influences leadership, employee behavior, and overall performance. It highlights the financial costs associated with poor cultural fit and risk awareness, using case studies such as BHP Billiton and Krispy Kreme to illustrate successful and unsuccessful practices. The document concludes with strategies for fostering a robust risk culture and the importance of persistence and engagement in this process.

1. Risk Culture
Presented for the Risk Engineering & Assessment Symposium
Presented by: Dean Eddy
Date: July 2012

2. Objectives
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3. What is an organisation?
• Firstly they are complex structures of social interactions,
consciously designed to achieve collective goals
• They draw on their environment and transform inputs into
outputs
• They use the expertise of their human resources to produce
results, which can be measured and compared
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4. What is an organisation?
Closed Open
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5. What is organisational culture?
“Manifestation of human intellectual achievement regarded
collectively and the achievements of a particular time or
people – it is the way of life of a particular society or group”
(Oxford Dictionary 2006: 347)
• 1960s American model of management was supreme –
organisational culture was not considered paramount in
management theory
• 1970s a shift by the Japanese towards a solid reputation for
service, reliability, values and quality – which matched their
societal values that found synergies and success
• As a result since the 1980s and 1990s culture has played a
large part of any business curriculum and seen as a
fundamental element for business success
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6. Organisational Culture
“Organisational culture is the pattern of basic assumptions that a
given group has invented, discovered or developed in learning to
cope with its problems of external adaptation and internal
integration, and that have worked well enough to be considered
valid, and therefore, to be taught to new members as the new way
to perceive, think and feel in relation to those problems”
Schein. E. (1984) Sloan Management Quarterly, Winter 1984. p.7
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7. Organisational culture
Taylor, C. (2012) Walking the talk – Building a Culture for Success. Random House Group Limited, London, SW1V 2SA
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8. Financial risk
Cost of not achieving a cultural fit in an organisation
• 50 hours of HR department’s time to manage the issue $ 5,000
• 15 hours spent by senior executives to manage the issue $10,000
• 250 hours of direct manager’s time to manage the issue $25,000
• Associated costs to cover work not achieved in the period $25,000
• Associated costs with recruiting & training of new staff $85,000
$150,000
Sutton, R. (2011) Building a Civilised Workplace and Surviving One That Isn’t. Little Brown Book Group.
Embankment, London EC4Y 0DY
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9. What is risk?
Principles and guidelines standard ISO 31000 suggest you need to
“The effect of uncertainty on objectives”
place risk in the context of being able “to define the external and
internal parameters that organisations must consider when they
manage risk”
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10. Risk matrix
Consequences
Likelihood
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11. Risk awareness
• Why is risk awareness important?
• Failed start ups in Australia – 40% in first year
• 82% in the first ten-years
• Reason for these failures – leadership – lack of cultural
cohesion – succession planning and foresight
• The inability to implement governance and support structures
• A mismatch of vision to strategy
Source: Australian Tax Office (2011)
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12. Risk journey
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13. Risk culture
Enabling
Organisation
Structure Tools &
Training
Part of
Strategic
Planning
Vision / Value
Governance
Leadership
Information &
System
Consistent
Appetite
Ownership &
Communication
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14. The architecture
STRATEGY
VISIBLE
STRUCTURE SYSTEMS
INVISIBLE
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15. A case study
• BHP Billiton
• Incorporated in 1885 – self sufficient and closed until 1915
• Used its own resources – built their own towns – Newcastle,
Port Kembla and Whyalla
• Became risk aware in the 1970s and their vision shifted. They
looked for efficiency and growth after suffering market share
lose due to cheaper imported products
• Restructured – and sliced into divisions – each with its own
organisational structure to ensure flexibility and the ability to
react to the market. Each with their own level of
accountability
• Record profits in 2011 of US$10.52 Billion
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16. BHP Billiton – what they got right
Leadership Behaviours External Climate & Drivers
- Clear tone set from top - Industry direction
- Culture embedded through - Competitors
front-line leaders - Government funding or pressure
Perceived Value Risk Managers/Champions & Leaders
- Had mandate and authority
Governance Framework & Tools
- Positive change leaders
- Provided clear language
- Tenacity
- Accessible tools
- “risk champions” scattered
- Responsive structure throughout the business
- Linkages and integration
- Enabled decision making
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17. BHP Billiton – what they got right
top down perspective
inform direct
bottom up perspective
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18. Not being aware of risk
• Krispy Kreme – a case study
• Took their product to the people – large expansion based on
the balance sheet and not on sustained demand for their
product
• No full understanding of the market in which they operated
• Did not keep the brand exclusive – did not limit distribution
• Failure to understand consumer tastes
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19. The cost of not being risk aware
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20. What they got wrong
History Governance Framework & Tools
- “fall in love with shadows” had a - Too complex
backwards looking mentality
- Full of jargon
- “this is the way we’ve always done
it” - Reporting processes drove poor
behaviours
- Misread popularity as long-term
loyalty - Paperwork was too complex
- Not practical - did not work in
organisation
Leadership Behaviours - Set up silos
- Not enough resources applied
- Limited sharing
- No follow-up
- Blame culture Risk Managers/Champions & Leaders
- Claimed ignorance to issues
- Not influencers
- No effective communication
- Not positioned at right level
- Acted alone in silos - disconnected
- Seen to own risk, rather than
share it
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- On their own

21. The journey forward
Set the stage
- Create a sense or urgency
- Put together a guiding team
Decide what to do SafetyC’s Journey C’s
5 Journey – 5
- Develop the change vision and
strategy
High
Management
Activity
Make it happen
Supervisory
- Communicate the Activity
understanding and buy-in Management
Team Activity
- Empower others to act Low
Leadership
- Produce short term wins
Cr
Co
Co
Co
Cu
isi
nt
m
m
ltu
- Do not let up
s
pl
m
ro
re
ia
itm
l
nc
en
e
t
Make it stick
- Create a new culture
MindTools (2012) Implementing Change Powerfully & Successfully [online] MindTools
http://www.mindtools.com/pages/article/newPPM_82.htm (accessed) 5 July 2012.
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22. The journey forward
MD
Human Strategy & Corporate Customer Strategic Risk
Services Sustainability Committee
Resources Performance Services
Members
Divisional Divisional Divisional
Divisional Divisional
Operational Operational Operational
Operational Operational
Risk Committee Risk Committee Risk Committee
Risk Committee Risk Committee
Aggregated Operational Risk Report
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23. Risk aware
top down perspective
inform direct
bottom up perspective
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24. Risk culture
• Final hint for embedding a risk culture
Just keep going………………
Patience Perseverance
Passion
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25. Good luck to you all on the journey!

26. Dean Eddy
M: 0412 301 336
E: dean@enhancesolutions.com.au