Why a strong Risk Culture is so important for businesses

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Why a strong Risk Culture is so important for businesses

In an age when businesses face so many threats, a culture which advocates strong yet sensible risk management within organisations is becoming increasingly important. That is the message from Alan Stenhouse, who runs Scottish business AST Risk Consultancy & Training Services Ltd.

Alan says that all companies have to take risk in order to grow but the key is having a culture in which the level of risk that is acceptable is understood and where all staff are equally responsible for managing it.

He said: “All organisations need to take risks to achieve their objectives. Those that manage the risks well stand to achieve great benefits but organisations with inappropriate risk cultures can find themselves allowing activities that are at odds with the ethos of the business.

“At best a poor strategy will hamper business performance, at worst it will lead to serious reputational and financial damage. Poor risk cultures are frequently found at the root of organisational scandals and collapses.

“Risk management needs to run throughout the company but it starts at the top with a strong lead from the board and senior management.

“Key to a good risk culture is that information flows constantly both ‘up and down’ the organisation, event reporting and whistle-blowing are encouraged and everyone seeks to learn from mistakes/near misses without fear of blame.

“However, there still has to be a strong sense of accountability. Appropriate risk-taking behaviours should be rewarded and encouraged with inappropriate behaviours challenged and addressed.

“Look at incidents where things went badly wrong and you will usually find that this kind of proactive risk culture did not exist within the organisation involved.”

How would you describe the Risk culture in your organisation? Does this need to change to provide a greater chance of success?  Don’t delay, contact AST Risk Consultancy & Training Services for support now.