Why Risk Culture? Risk culture refers to the set of values, beliefs, knowledge, and behaviors within an organization that shape how its members perceive and manage risks. In a time of increasing regulatory complexity, rapid digitalization, and geopolitical instability, a strong risk culture is becoming a crucial factor for survival and development—both for financial institutions and the real sector.

Risk Culture in Financial Institutions The financial sector, due to its systemic importance, is subject to strict regulatory frameworks that increasingly emphasize the importance of the “informal infrastructure”—such as risk culture. Supervisors like FBA, ABRS, EBA, and ECB are increasingly assessing how banks’ governance structures create, communicate, and oversee risk culture.

Key contributions of risk culture in this sector:

• Crisis Prevention: A strong culture enables early identification and resolution of issues before they escalate into incidents.
• Regulatory Compliance: Facilitates the implementation of requirements related to ICAAP, ILAAP, Recovery Plans, and similar frameworks.
• Long-Term Reputation: Institutions that nurture transparency and accountability build greater trust with clients and regulators.

Risk Culture in the Real Sector In the real sector, especially in companies operating in global markets, risk culture is often less formalized, but its impact is equally significant.

Contributions of risk culture in the real sector:

• Operational Resilience: Companies that embed risk thinking into all levels of decision-making can adapt more quickly to changes (e.g., supply chain disruptions).
• Better Investment Decisions: A clear perception of risk reduces the likelihood of poor strategic decisions.
• Increased Competitiveness: Organizations that promote responsible behavior and employee proactivity are better at seizing opportunities and avoiding costly mistakes.

Dimensions of Risk Culture Regardless of the sector, risk culture can be viewed through several dimensions:

• Tone from the Top: Leadership sets the example through its behavior and decisions.
• Employee Involvement: Do all employees understand their role in risk management?
• Incentive and Consequence Systems: Are appropriate behaviors encouraged, or are violations of procedures tolerated?
• Learning Mechanisms: How does the organization handle mistakes and learn from incidents?

Building Risk Culture

• Education and Training: Continuous education at all organizational levels.
• Alignment of Procedures with Practice: Rules must be realistic and applicable.
• Open Dialogue: Encouraging risk reporting without fear of retaliation.
• Integration into Processes: Risk culture should not be an add-on, but an integral part of organizational management.

The Human Resources Perspective Human resources play a key role in shaping and maintaining risk culture. The HR function serves as a bridge between strategy and employees’ day-to-day behavior.

• Recruitment and Selection: Include ethics and responsible behavior as criteria in hiring processes.
• Development and Training: Systematically incorporate risk management and risk culture topics into onboarding and leadership development programs.
• Performance Evaluation: Include risk management aspects in performance assessment systems, clearly recognizing and rewarding desired behaviors.
• Psychological Safety: Promote an environment where discussing risks, mistakes, and ethical dilemmas is not only permitted but encouraged—without fear of sanction.

Examples of Poor Risk Culture

• Ignoring Negative Information: Management disregards warnings or negative feedback from operational levels.
• Overemphasis on Profit: Focus on short-term goals and bonuses leads to risk neglect.
• Lack of Accountability: Vague responsibilities and absence of sanctions for procedural violations.
• Culture of Fear: Employees are afraid to report failures or potential risks.
• Formalism Without Substance: Risks are documented to meet formal requirements, without real analysis or management.
• Functional Silos: Departments do not share risk-related information, leading to ineffective prevention.

Examples of Good Risk Culture

• Organizations that Develop a “Risk Champion” System across all business units, ensuring operational risk awareness at every level.
• Companies that Promote Open Dialogue About Risks, including mechanisms for anonymous reporting of issues.
• Introduction of “Lessons Learned” Sessions after every incident or business failure, leading to tangible changes in procedures.
• Reward Systems Aligned with Risk-Minimizing Behaviors, not just profit generation (e.g., banks under ECB supervision linking bonuses to non-financial KPIs).
• Integration of Risk Management into Strategic Planning, enabling better balance between innovation and control

Conclusion Risk culture is not an abstract concept, but a concrete advantage in today’s volatile environment. Organizations that develop it systematically will not only avoid crises more easily but will also be better positioned to recognize and seize growth opportunities. That’s why risk culture must be the foundation of every management system—regardless of the organization’s size or sector.

What is the state of your organization’s risk culture?