Culture is perhaps the ultimate strategy and risk management tool: get the culture right and objectives will more likely be achieved and risk managed. Get the culture wrong and failure will be just about inevitable; even though ultimate failure might well be preceded by a period of stunning financial success, as we have seen with many organizations that suffered catastrophic failure. An aligned and appropriate culture is a prerequisite for a strategy that is successful and sustainable.
There are seven key characteristics of the Strategy-focused, Risk-aware culture,
- Driven by a compelling vision
- Live by a clear set of values
- Led with integrity
- Align risk-taking to strategy
- Established clear accountabilities
- Engage in high quality conversations
- Incentives are aligned to appetite
We strongly argue that culture should be treated as an organizational asset, as important as any other. Many CEOs that fail -most notably of course those that recently ran major financial services organizations that collapsed – might well have surveyed their corporate wreckage and thought to themselves, “I wish I’d paid more attention to culture.” More specifically we would argue that the thought should be “I wish I’d paid more attention to creating a culture that operated with a clearly defined and communicated appetite for risk that was aligned to our corporate strategy.