Risk Culture and Risk Attitude: A Comprehensive Literature Review

This literature review delves into the multifaceted concept of risk culture, examining its definition as a set of norms, attitudes, and behaviors influencing risk awareness and management within organizations. It explores the interplay between risk attitude and culture, emphasizing the need for a robust risk culture within project teams to enhance performance and productivity. The review covers the meaning of risk culture, its importance in compliance, organizational performance, and risk management effectiveness, along with the elements that constitute a good risk culture. It further outlines strategies for establishing and maintaining a positive risk culture, including top-down and bottom-up approaches, and discusses the key elements that foster desired behaviors, actions, and thoughts. The paper also details the stages of building, changing, and refining an organization's risk culture, emphasizing the role of communication, training, and ethical standards in achieving cultural awareness, change, and maturity.

Literature Review Risk
Culture and Risk Attitude

Executive Summary
Risk culture is mainly termed as an formative set of norms, attitudes, behaviour,
corporate values and competencies which is mainly linked to risk awareness and risk taking that
further lead towards determining organisation commitment towards style of risk management. In
addition with this, it has been defined that risk culture influence management and employees
decision in daily basis activities. In this present report, formative discussion has been made on,
the manner in which risk attitude influence risk culture and need to build good risk culture with
project team.

Table of Contents
Executive Summary ........................................................................................................................2
Introduction......................................................................................................................................4
Body of report..................................................................................................................................4
Meaning of risk culture..........................................................................................................4
Meaning of culture.................................................................................................................6
Need to build a good Risk Culture with project team............................................................6
Conclusion.....................................................................................................................................10
REFERENCES..............................................................................................................................11

Introduction
Risk culture is defined as an attitudes, beliefs, values, knowledge and understanding
relating to risk which is shared by group of individuals with a common set of purpose. In
addition with this, risk culture is mainly related compliance and operational risk and can be
further termed as Key Risk Indicator (van Rooijen, M., 2017). Thus, it become essential for an
organisation to have well effective risk culture which they enable rewards to individuals for their
task and further inform them with each and every required information. This report covers the
aspects of risk culture along with risk attitude that influence risk management outcome. In
addition with this, report also cover the need as to build a good risk culture with project team.
Lastly project cover discussion related to the manner in which good risk culture look like.
Body of report
Meaning of risk culture
Risk Culture refers to values, beliefs and knowledge about the risks shared by the group
of people having common objectives. Risk culture is applicable to all the public, private and
voluntary organisations. Risk Culture is the element of the risk management which cannot be
controlled directly as they are embedded in the culture of an organisation. A risk culture in the
organization means the employees of the company knows about for what the company stands,
what are their boundaries within which they can operate in order to achieve the long term
strategic goals for the organisation. It is important for every organisations to take risks in order to
achieve their objectives as risk culture is important for several reasons which includes:
Compliance, Organisational performance and risk management. Compliance : Risk culture is the
compliance requirement for understanding the culture at the organisational level. Organisational
Performance : Risk Culture is an important determinant for the success and failure of the
organisation in which there is principle emphasis on the many areas of behaviour and culture.
Risk Management Effectiveness : Risk Culture determines the ability to take the right risk safely
as it directly affect the effectiveness of risk policies, practices and procedures.

Fig. 1: Risk Culture Chain
Risk Culture can either be defined deliberately or intentionally or emerges naturally
within the organisation. Setting the risk culture directly from the top is the first option which
requires a clear statement from leaders describing the beliefs about the risk and explaining the
approaches that are intended to take in order to exploit risk and creates benefits out of them. The
risk culture desired by the top managers are communicated to all the staff members which will
keep no doubt about how the risk be addressed within the organisation. The second option can be
to allow the risk culture to emerge naturally in the organisation. The focus of this approach is to
put all elements of risk in practise to allow risk to be managed properly. As people of
organisation, will start experiencing the problems and their enhanced benefits wherein they will
recognise the importance of managing the risk effectively. Their belief in risk management will
reinforce them to correct their behaviour. This will create a strong risk culture which in turn
encourages the risk related behaviour correctly. Also, every employee in the organisation knows
their boundaries as to what extend the risk can be acceptable. Therefore, due to the advent of
innovation and technologies companies align their tools in the organisation with the risk culture
to ensure efficient and effective working of the organisation.

Meaning of culture
Culture is defined as “ the pattern of beliefs, values and learned ways of coping with
experience that have developed during the course of an organization's history, and which tend to
be manifested in its material arrangements and in the behaviours of its members.” (Brown,
1995). Risk culture is one of the most important component matter which is essential to develop
and maintain positive and strong culture as it effectively influence organisational performance.
Compliance and risk management effectiveness (Risk Culture, 2019). If it is considered at
organisational level it is essential for organisation to effectively understand and express risk
culture as it is a compliance requirement which is essential for company to abide as corporate
governance. For an instance, the international risk standard ISO31000:2009 (International
Organization for Standardization, 2009) include the aspects related to the fact that, “Management
should ensure that the organization's culture and risk management policy are aligned.”(section
4.2). In addition with this as per according to (section 4.6)“Continuous improvement decisions
should lead to improvements in the organization's management of risk and its risk management
culture.” Thus, it has been identified that risk culture is one of the most essential factor that lead
towards organisational success as well as failure. There are some certain elements which is
included in risk culture some of that include, governance in this it is essential for an organisation
management to have clear as well as communicable approach towards risk which is basically
understandable to all level of employee. While if it is consider in accountability, it is essential
for an organisation to enforce clear set of lines of accountability. Other elements of risk culture
include, Incidents and Escalation, in which it is important for an organisation to have focused
approach towards identification of the activities that went wrong and the necessary changes
which is required to adopt. In addition with this, as per according to this element it is essential
for company to effectively encourage open discussions. Training, Succession Planning and talent
management, core competency and tone from the top are some other essential elements of risk
culture.
Need to build a good Risk Culture with project team
It is essential to build a good risk culture with project team as it effectively facilitates
better performance that simultaneously lead towards increasing overall productivity. In order to
build good risk organisation can effectively set risk culture by considering both ways essential
which is mentioned below:

Setting risk culture directly from the top: In this there is an effective requirement of
clear statement of attentive from leaders within an organisation. In addition with this policy for
risk management along with vision and descriptive values along with beliefs about risk are also
required. It is important that top management effectively communicate desired risk culture to
staff and further address any related doubt in order to ensure appropriate related behaviour as to
promote and encourage risk culture in best effective manner.
Allow risk culture to emerge naturally: Organisation can also consider this option as it
concentrate towards putting all the essential practical elements in place in an organisation as to
effectively allow risk to be effectively and properly manage along with infrastructure, people and
people. As if individuals start putting risk management within an organisation into their routine
jobs practices that can effectively able to start experiencing less problems while taking
measuring increase in benefits. As they realize risk management working for them, people will
appreciate the value of managing risk. Their notion in the value of risk management will
strengthen the correct behaviour. This lead towards creating a positive cycle within which acting
properly towards risk creates a strong risk culture, and that simultaneously inspire the right risk-
related behaviour.
Organisation can effectively take advantage of both of the top-down and bottom-up
approaches as to effectively develop risk culture work. In this, it is important for organisation to
firstly deal with risk culture then effectively allow emergence of risk culture. In addition with
this, it has been evaluated that both the form of ways have separate set of strength and
weaknesses which is required to be effectively consider by organisation as to identify which one
suits their organisational structure best. Along with this they can undertake blend of both in order
to encourage the optimal risk culture.
Thus, it has been defined that culture is mainly embedded with individuals thoughts that
later effectively influence their actions as well as behaviour. There are mainly six key elements
that can be undertaken as to create and maintain good risk culture that include thoughts,
behaviours, actions (The 6 key elements to creating and maintaining a good risk culture. 2019).
In addition with this, organisation it is essential to create and maintain good risk culture. For this
there are some key elements that can be consider by organisation as to effectively foster actions,
behaviours and thoughts. Organisation is required to make their staff understand with risk and
risk management. Along with this, risk management framework is required to be aligned as

business enabler rather than as a hindrance. Further it is essential for company to ensure that risk
management is simple and they must reward good behaviour as well as actions.
There are mainly three stages that can be consider by organisation for continuous
improvement of an organisation's Risk culture:
Stage 1: Building Cultural Awareness
In this factor organisations mainly establish their risk management expectation for
company along with defining roles as well as responsibilities around risk. In this it is essential
for organisation to communicate clearly and continuously to their workforce in order to identify
their expectations (Stevenson, 2018). Further it is essential for companies to educate employees
via formal training and communications in order to effectively fulfil organisation cultural
expectation. There are some components that can be effectively consider as to build cultural
awareness some of that include, delivering communication from leadership by utilizing common
risk management vocabulary, effective clarification of risk management accountabilities as well
as responsibilities, refining different types of recruitment methods along with risk management
capabilities and embedding risk management within on boarding programs and introduction.
Stage 2: Changing an Organisation's Culture
In advanced levels, organisation face some cultural changes stage which is required by
them to embrace as to effectively foster an environment that effectively recognize and reward
individuals for paying an attention to risk. At this stage it is essential for organisation to
effectively develop motivational systems in both positive and negative manner. In addition with
this, it is essential for company to rewards right individual behaviour while penalizing wrong
behaviour. Along with this, at this point of stage, organisation must tend towards focusing in
talent management as to get right individual in right position as to effectively drive best effective
results (Frewer and et. al., 2016). Along with this, one of the most important hallmark which is
included in this stage cover ethical and compliance standards which is required to be effectively
consider by organisation. There are some key essential components which is included in
organisation's risk culture are creation of culture of constructive challenge, establishment of risk
management consideration within talent management processes and embedding risk performance
metrics within motivational systems while reinforcing ethical, behavioural and compliance
standards.

Fig. 2: Organizational culture
Stage 3: Refining the Organizational Culture
By reaching at this stage, companies get more experience and further become more
mature at their cultural development. In addition with this, at this level they effectively try to
monitor expectations versus cultural performance. In this expectations can be set by board of
directors, investors, stakeholders, employees, analysts and management. In this level of stage,
organisations effectively get engaged with adjusting individuals, communications and strategies
as to effectively produce cultural outcomes which is desired by them. Thus, it is essential for an
organisation to undertake both learning and adaptability approach as to effectively adjust and
further move towards the fair path of cultural road map in order to gain best effective results. In
this, it is essential for an organisation to effectively consider certain required steps during this
stage such as, holding individuals accountable for actions done by them, integration of risk
management lessons while refining risk performance metrics as to effectively reflect changes
within business strategies, tolerance as well as risk appetite and redeploying person as to reflect
change to company priorities and strategy.

Conclusion
As per the above mentioned report, it has been concluded that risk management acts an
one of the most important aspect that effectively lead towards project success. In addition with
this it further include combination of cultural understanding along with an ability as to
effectively unify shared values. It is important for an organisation to ensure that they
communicate organisation vision, mission and cultural beliefs to workforce as to positively and
effectively influence best effective execution of project completion and planning. In order to
manage risk human behaviour play most important role. Thus, culture acts as an one the key
essential element that effectively lead towards influencing practical application of risk
management process. In this project discussion has been made on, risk awareness process at the
initial stage of project in the stage of risk identification. In which it is essential to involve all
project members. By considering this organisation can effectively able to prevent risk. In
addition with this, it is essential for company to effectively execute communication within team
environment as to facilitate positive environment that lead towards attainment of best effective
result outcomes.

REFERENCES
Books and Journals
van Rooijen, M., & Newstead, S. (2017). Influencing factors on professional attitudes towards
risk-taking in children’s play: a narrative review. Early child development and
care, 187(5-6), 946-957.
Frewer, L. J. and et. al., (2016). Risk/benefit communication about food—a systematic review
of the literature. Critical reviews in food science and nutrition, 56(10), 1728-1745.
Nobre, L. H. N. and et. al., (2016). A cross cultural test of financial risk tolerance attitudes:
Brazilian and American similarities and differences. International Journal of Economics
and Financial Issues, 6(1), 314-322.
Yang, E. C. L. and et. al., (2017). A systematic literature review of risk and gender research in
tourism. Tourism Management, 58, 89-100.
Hann, K. E., Freeman, M., Fraser, L., Waller, J., Sanderson, S. C., Rahman, B., ... & Lanceley,
A. (2017). Awareness, knowledge, perceptions, and attitudes towards genetic testing for
cancer risk among ethnic minority groups: a systematic review. BMC Public
Health, 17(1), 503.
Wang, J., Zou, P. X., & Li, P. P. (2016). Critical factors and paths influencing construction
workers’ safety risk tolerances. Accident Analysis & Prevention, 93, 267-279.
Stevenson, M. and et.al., (2018). Concepts for communication about risk in dementia care: A
review of the literature. Dementia, 17(3), 359-390.
Pillemer, K., Burnes, D., Riffin, C., & Lachs, M. S. (2016). Elder abuse: global situation, risk
factors, and prevention strategies. The Gerontologist, 56(Suppl_2), S194-S205.
Asgari, S. and et. al., (2016). Impact of considering need for work and risk on performance of
construction contractors: An agent-based approach. Automation in Construction, 65, 9-
20.
Kamalahmadi, M., & Parast, M. M. (2016). A review of the literature on the principles of
enterprise and supply chain resilience: Major findings and directions for future
research. International Journal of Production Economics, 171, 116-133.
Graetz, G., & Franks, D. M. (2016). Conceptualising social risk and business risk associated
with private sector development projects. Journal of Risk Research, 19(5), 581-601.
Brown, A. (1995). Organisational culture (2nd ed.). London, UK: Pitman Publishing.
[ Online]
Risk Culture. 2019. [Online] Available
Through.<https://www.openriskmanual.org/wiki/Risk_Culture>
The 6 key elements to creating and maintaining a good risk culture. 2019. [Online] Available
Through.<https://blog.protecht.com.au/key-elements-to-creating-and-maintaining-a-
good-risk-culture>
What does good risk culture actually look like?. 2019. [Online] Available
Through.<https://knect365.com/riskminds/article/b2231e10-0d73-472a-
9ec1f2523227faad/what-does-good-risk-culture-actually-look-like>