The topic raises numerous questions; can Risk Culture be measured? How do you define, as a top management board, the type of Risk Culture you would like to see and observe in your company? Simon discusses how there is no ‘one right culture’ for everyone, but there are commonalities, one of which is avoiding too many sub-cultures, you want consistency.
What do companies need to understand about Risk Culture? Change is often a slow and steady process, organisations need to recognise they are never going to change that quickly, but build over a period of time.
Simon also touches on the cultural differences between banks and insurance companies, and how it does vary. Banks like models, and doing things more mechanistically and numerically. Insurance companies are more organic, often more confident about themselves as organisations.
Will Regulators start asking for measurement and reporting on the status of risk culture? Simon mentions that we are already seeing the development of the new financial conduct authority, looking at more human/cultural aspects of an organisation. Regulators want to do more to understand risk culture, but there is not yet a desire to set up a formal mechanism of measuring risk culture. Good regulators consider cultural aspects instinctively.
Watch the full interview below of Professor Simon Ashby’s thoughts on Risk Culture. Simon will be back at RiskMinds Insurance in March.