Risk Management: Analysis of Risk Culture and Attitude in Business

This report provides an analysis of risk management, focusing on the influence of risk culture and attitude on business operations. The executive summary highlights the importance of open communication, ethical behavior, and a robust commitment to responsible practices. The report explores ho...Read More

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RISK MANAGEMENT

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Executive summary
Effective risk management increases open communication to share knowledge with the best
practices, regular development and robust commitment to responsible and ethical organizational
behavior. Risk culture has enough capability to manage and develop the risk attitude within a
managed way and allow to developing appropriate behavior of risk-taking and making a risk
mature culture within the organization. Risk attitude allow management to develop the effective
approach to get higher success. This report includes the analysis of risk attitude and culture to
shape the business actions.

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Table of Contents
Executive summary.....................................................................................................................................1
Introduction.................................................................................................................................................3
Influences of risk attitude and risk culture...................................................................................................3
Risk culture influences risk attitude or vice versa........................................................................................3
Importance of risk culture............................................................................................................................4
Protection of organization...........................................................................................................................4
Conclusion...................................................................................................................................................5
Bibliography................................................................................................................................................6

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Introduction
Culture allows management functions to ensure adequate attention regarding enterprise value
and behavior. Risk culture within organization is known as the infrastructure of risk management
that reflects the shared objectives, values, goals, and reinforces mechanisms to embed risk within
the processes of decision making. Organization risk attitude ensures effective communication
regarding risk and ethics. Risk management incentivized businesses to incorporate risk and
manage risk in guidelines to meet their risk standards (Southee & Board, 2015, p. 100). The
following discussion will cover the discussion about the risk culture and attitude.
Risk culture & attitude influences
According to Handscomb, (2018, p. 20), risk is an uncertainty that can have a negative and
positive impact on the objective. Attitude is known as the chosen state of mind, mental view or
disposition regard to fact or states that disposition regard to state or fact. The risk attitude is
known as the state of mind regarding uncertainties that hold negative and positive effects on
objectives. It is also known as the chosen response regarding the perception of substantial
uncertainty. Culture is conducted to encourage effective management of risk as open channels of
communication like (open and upward), share knowledge, best practices, regularly improve the
process and create a robust commitment to the responsible and ethical behavior of the business.
In the limelight of the discussion it can be concluded that risk attitude and culture affects the risk
management outcome.
Risk culture influences risk attitude or vice versa
Smith (2016, p. 200), has discussed that risk attitude is known as the element that adopted by the
group or individual regarding risk. Organization by managing and altering risk attitudes
influence the risk culture in an accurate direction and create a new and mature risk culture. The
risk attitude leads to different and external risk behaviors regarding the implementation of the
process of risk management and risk-based in decision making within the risk culture. Risk
attitude is modified according to the present situation as monitored and reassessed periodically to
determine the risk culture.

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According to Peterson (2013, p. 60), Risk culture affects the risk attitude including tactical and
strategic decisions as define the volume of risk within the range of settings and situations. Risk
culture affects the risk attitude as shapes how groups and individuals position themselves to take
risk within the situation which is perceived as important and risky. Risk culture informs set
strategies and objectives as the main decision-makers that determine the optimal course within
the uncertain environment and context in risk attitude. Risk culture determines the capabilities of
risk attitude to take accurate decisions safely as it affects the effectiveness of practices,
procedures, and policies. Risk culture in organizations exposed the broader variety of hazards on
the daily basis. This is important for organizations to effectively deal with the situations and
form the risk culture. Effective risk culture helps businesses to protect assets and reputation. This
creates a structure of processes, rules, and structures to control the risk attitude within the
organization. Risk culture is known as the beliefs, understanding, and knowledge about the risk
that is shared by the people and group with a shared purpose regarding risk attitude.
Importance of risk culture
(Deloach 2015, Para. 5) Elaborated a good risk culture understands employees to achieve the
objectives of project team. This enables and rewards employees to take the accurate risk within
an effective way. This educate workers regarding business risks and importance, employ a
manager regarding risk, make an efficient process regarding risk management, recognize good
risk behavior, create the right culture of risk at the board and senior level of management. This is
important for any project team as this kind of steps helps to grab the more opportunities. Risk
culture creates the effective system of behaviors and values within the project team to create the
specific events for future. Risk culture is known as the statement of values that translate them
within the concrete activities. It shapes the underlying attitudes of employees. It also creates the
collective capability to manage the risk.
Protection of organization
An organization that takes too much risk is needed to communicate and enforce the risk culture
regularly to create the alignment with the department of objectives and strategies. The
organization filtered down the whole organization to drive change within the culture. According
to (Anderson, 2013, para. 2) it should establish a clear understanding of the current culture and

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desired target culture. The organization should treat change management more effectively with
the appropriate allocation of resources and times. The organization is required to set the
objectives, design intervention with continue review of outcome and progress. Organization or
project needs to identify the threats and tackle the obstacles that increase and raised the chances
to achieve objectives, lower the turnover or employees, engage the employees, foster the
productivity, and increase the organization adjustment towards the economic and social
environment.
According to Hillson (2013, p. 50), Organization that takes a low risk is required to become
more aware about the management as part of the existing culture of risk and requires to establish
the structure of communication from the top starting. It should describe the vital aspect of culture
that an organization desire. An organization that takes a low risk is needed to implement changes
with the technological progress and support its risk management model through technology for
better control and allow acting within the advance form of an issue.
Conclusion
Organization by focusing on the risk culture and attitudes become more capable to align risk
with the strategy at the time of decision making. It also helps the businesses to balance the
program with the lines of defense to make the decision. This creates more options to allow
management to execute supervision more effectively. It creates particular lines of action by the
use of methodology and aligned the strategy of operations. This also enables employees to
become ready to face the critical problems.

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Bibliography
Anderson, S., 2013. Global Thinking. [Online]
Available at: https://www.glocalthinking.com/en/the-importance-of-establishing-a-collaborative-
risk-culture/
[Accessed 19 01 2020].
Deloach, J., 2015. Corporate Compliance Insight. [Online]
Available at: https://www.corporatecomplianceinsights.com/the-importance-of-risk-culture/
[Accessed 19 01 2020].
Handscomb, P., 2018. Underlined behaviors. Journal of Business Ethics, 47(08), pp. 18-63.
Hiillson, 2013. Risk culture & risk attitudes. Journal of Business Management, 78(08), pp. 20-
98.
Peterson, J., 2013. Influence of Risk Attitudes. Journal of Statistic Management, 14(06), pp. 25-
63.
Smith, S., 2016. Culture and Risk Management. Journal of Business Ethics, 63(07), pp. 158-986.
Southee, T. & Board, J., 2015. Risk Culture. Journal of Business Ethics, 59(07), pp. 89-96.