Risk management: How risk attitude affects risk culture

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RISK MANAGEMENT
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Table of Contents
Introduction................................................................................................................ 2
Literature review..................................................................................................... 2
Influence of risk culture and risk attitude................................................................3
Influence of risk attitude on risk culture..................................................................5
Need to build a good Risk Culture...........................................................................6
Good risk culture look like....................................................................................... 7
Conclusion.................................................................................................................. 8
References............................................................................................................... 10

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Introduction
Risk management is the procedure of recognising, assessing and managing dangers to the capital
and incomes of an association. These risks can rise from an extensive range of bases, counting
financial insecurity, legal obligations, strategic managing mistakes, calamities and natural
tragedies. For example, IT security risks and data-associated threats, and the strategies associated
with risk management to relieve them have turn into the main concern for digitized corporations.
Two other terms i.e. risk culture and threat attitude are strongly associated with risk managing
(Liu, Meng, and Fellows, 2015). Risk culture is the word defining the standards, beliefs,
information, attitudes and knowledge related to the risk mutual for a group of individuals with a
collective determination. This relates to all businesses - counting private establishments, public
figures, not-for-profits and governments organisation. An effective risk culture is actually able to
enable and recompenses persons and groups for risk-taking activities in a knowledgeable manner
in favour of the company (Richardson, and Fenech, 2012) Risk is the word that is associated with
insecurity about a happening and its consequence, irrespective to whether the incident and
consequence are favourable or unfavourable. In this particular assessment report the influence of
risk culture and threat attitude on threat managing, the influence of risk attitude on risk culture,
need of developing risk culture, and what does the culture look like will be discussed.
Literature review
According to Summerill, Pollard, and Smith (2010), all administrations require to appliance risk
culture strategy to achieve their purposes. They further reported that the prevalent risk culture
inside a business can make it meaningfully enhanced or poorer at handling these threats. Risk
culture considerably impacts the ability to take planned risk choices and convey performance
assurances. According to Power (2009), establishments with unsuitable risk cultures may

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unintentionally find themselves letting actions that are completely at probabilities with specified
guidelines and processes or operating totally outside these guidelines. An unsuitable risk culture
indicates not only that some of the persons or groups may undertake these happenings but that
other organization disregards, overlooks or does not perceive what is happening (Hillson, 2013)
At finest this can obstruct the attainment of strategic, planned and effective goals. Throughout
the risk examination procedure, when it is significant to establish the seriousness of the threats,
culture can display its impact again. Evading conflicts, admiration for age and superiority,
circularity, modesty can help in building a favourable risk culture. According to Roeschmann
(2014), observing culture as flexible undertakes that certain features of risk culture are needed in
an organization as they positively affect the risk controlling of. Therefore, applying risk culture
is a must for organizations; it is an administrative characteristic that can be handled and altered.
Stulz (2016) stated that suitable risk culture is important to the achievement of risk managing in
carrying out its function. Establishing the risk management purpose so that it can play that part is
inspiring since there are boundaries in measuring the risk and as, while complete rules can inhibit
damaging risk-taking, they similarly limit the institutional flexibility to take benefit of chances
that upsurge firm value. According to Roslan, and Dahan (2013), consequently, without a risk-
aware culture being implanted at every level of business, the big amounts of possessions that had
been expended by the association to appliance the enterprise risk managing program can be
ineffective.
Influence of the risk culture and risk attitude
Improper risk cultures are frequently categorized by the complacency of performance or the
standardization of unwanted happenings. Difficulties often develop throughout times of
managerial stress, when different pressures distract consideration from commercial- as usual