Measuring risk culture is tough, but by following some simple steps you can create a dashboard that will not only help you monitor the state of your organisation’s risk culture, but will also enable you to better align cultural aspirations with strategic objectives.
Risk culture is a subset of enterprise culture – its aim is to look at the ways culture and environment influence how people look at and prioritise risks.
If you’re reading this, you’re most likely looking for a measurable framework to support this.
Being able to measure your risk culture is an essential tool for developing a more mature and desirable cultural state across your business.
Your ultimate goal is to get conduct, consequence and culture to come together in harmony, summed up within cultural aspirations - strategic targets - set and endorsed by the executive board.
Here are some tried-and-tested tips for developing a dashboard to help you do just that, taken from a recent member meeting attended by risk managers from leading organisations across a variety of sectors.
Before you can begin to monitor risk culture, it is essential you understand what exactly you are able to measure at your organisation.
To help understand what is measurable, you should ask yourself some simple questions about your organisation’s current and desired culture (which both form the basis for cultural aspirations):
What are the behaviours that we expect to be exhibited?
What are the ultimate business outcomes we want each cultural aspiration to deliver? What are the progress measures
What types of activities would we expect to see if each aspiration was working perfectly as intended?
What do we think people will think or feel doing those activities?
You can then build a logic tree to establish what the future state of the organisation’s culture would look like under different scenarios, as well as what you would need to do to make each of them a reality.
Under each of the desirable outcomes within the logic tree, you can then begin to create a list of measures to record cultural progress. These measures can be identified by way of workshops, interviews, and other data available across your business.
2) Define your goals
Once you know what is measurable within your organisation, you can then build cultural aspirations to act as strategic targets for the business. These aspirations should cover both risk and enterprise-wide cultural goals in order to create a single culture state to aim for.
From these aspirations you can build a cultural evolution plan to help guide your organisation towards its desired cultural state which complements its risk appetite.
This plan should focus on behaviours within the organisation. It should also include a set of initiatives, some of which can be used as accelerators to get an organisation closer to its cultural aspiration. Check out these three tips for building an effective risk culture.
3) Build a dashboard
Under each of the aspirations defined in step two, you can then build several measures to track progress. Each aspiration should have a measure of each of the following metric types:
You use these measures to track performance over time, whether that be monthly or quarterly. You can also see how performance is improving as you progress towards your end goal. If performance against a certain aspiration begins to dip, this is evidence that more attention needs to be given to the business areas related to that particular measure.