Conclusion
There is clear evidence that a culture of risk
management changes the way employees think
about their responsibilities and, ultimately,
influences enterprise-wide performance. When
everyone in the organization becomes a
participant in the risk management program,
then they understand the risks and support the
controls that are in place.
Financial services firms with a strong risk
culture supported by enterprise-wide data and
analytics had relatively stronger performance
during the most recent financial crisis,
according to a new report by Oliver Wyman
and the RMA Journal.
1Wyman reports,
“[L]eading organizations had made an early
investment in a risk appetite supported by
senior management, and used their ‘risk
culture’ to communicate risk appetite in a way
that ensures it becomes part of day-to-day
decision-making throughout the organization.”2
A strong risk management culture will enable
innovation in the business lines without
exposing the organization to the kinds of risks
that resulted in the most recent financial crisis.
The result will be more intelligent risk-taking,
more effectively focused execution against
opportunities, and fewer catastrophic failures
and loss events. Investors will notice.
Regulators will notice. Customers will notice.
Investing in sound business practices leads to a
healthier bottom line, a solid reputation and a
strong competitive position in the financial
services market.