EPM5740 Project: Impact of Risk Culture and Attitude on Management

This report, prepared for the EPM5740 Project Risk Management course, delves into the intricate relationship between risk culture and risk attitude and their combined impact on project outcomes. It examines how individual risk attitudes can shape the overall risk culture within a project team, and conversely, how the established culture influences individual risk-taking behaviors. The report explores the necessity of cultivating a robust risk culture, outlining its key characteristics and benefits, such as improved decision-making and enhanced project success. Furthermore, it provides a detailed analysis of what constitutes a good risk culture, highlighting elements like clear communication, accountability, and a proactive approach to identifying and mitigating potential risks. The report is based on the literature review of the provided sources and additional research and is formatted using the VU Harvard AGPS style.

Running head: EPM5740 PROJECT RISK MANAGEMENT
Epm5740 Project Risk Management
Name of the Student
Name of the University
Author Note:

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Executive Summary
Risk culture can be defined as the values, knowledge, beliefs, attitudes and lastly proper
understanding of risk. It is shared by common group of people that have a similar purpose.
Effective risk culture is the one that helps in reward of individuals and groups that take a risk in
informed way. To improve the risk culture, an organization needs to have a proper understanding
with respect to top-down and bottom-up approaches. An organization can look down for
improving risk culture by focusing on some specific business and function. It is mainly done
operational focused approach.

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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Risk attitude influence risk culture or vice versa.........................................................................3
Need to build a good Risk Culture with your project team.........................................................5
Good risk culture look like..........................................................................................................6
Conclusion.......................................................................................................................................7
References........................................................................................................................................9

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Introduction
Risk management can be defined as the contribution of business and overall success of
the project. It mainly focuses on addressing any kind of uncertainty in proactive way for
reducing the overall threats (Hillson and Murray-Webster, 2017). It focuses on improving the
opportunities and proper achievement of objectives. Risk culture can be defined as the values,
beliefs, knowledge, and attitude along with an understanding of the risk that is shared by a
common group of people (Short and Sikora, 2016). It is applied to all the organization inclusive
of private organization, public bodies and government and lastly not for profit. A proper risk
culture helps in enabling and rewarding of individual and groups that make use of right task in
proper way.
In the coming pages of the report, an idea has been provided with respect to risk culture
and risk attitude that can have effect on the overall outcome of the risk management. The effect
of risk attitude along with influence on risk culture has been provided. The last section of the
report deals with good risk culture within the project team.
Discussion
Risk attitude influence risk culture or vice versa
Organization around the globe have made significant progress in the proper development
of rules, frameworks processes and lastly standardization of managing the risk. In many cases,
rules can be misunderstood and misapplied (Murray-Webster and Hillson, 2016). Missing link
helps in understanding how the given risk can be balanced along with rewarding the decision
making. Every organization comes up with a unique risk culture. The question is understanding
whether the culture is effective support along with understanding the long term success.

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Proper deficiencies in leadership, competencies, communication and culture that has been
blamed for many of the worst industrial industries and environmental disaster. Traders can cause
millions of losses for various investment bank that can be traced back to flaws in the behavior of
risk (Wang, Rieger and Hens, 2017). The board comes up with responsibility for setting up to
communicate with a task of enforcing a risk culture that can influence and strategy and objective
of the business. It comes with the risk behavior, culture and attitudes for the board and
translating it into concrete action by the help of translation of the concrete action in the
organization.
Management of risk tends to offer risk culture which is more for avoiding the downside.
Various organization is coming up with the view of the need for strong risk culture (Fraser and
Simkins, 2016). It can build the trust of consumers in the organization and market. It aims to
inspire the employees who are in economic interest of organization and their shareholders.
Risk can be defined as an uncertainty which can have either negative and positive effect
on more objectives. Attitude is stated as state of mind or deposition with respect to state of
matter (Pan, Siegel and Wang, 2017). It mainly combines two of the given working condition for
the present state of mind with respect to any kind of uncertainties. It can have either negative
effect on overall objectives of the project. There is a range of possible attitude that can be
accepted with the same situation and then the outcome can differ in overall behavior that can
lead to consequences (Heckmann, Comes and Nickel, 2015). Behaviour is reliable indicator for
inner attitudes and proper attention which can be paid to behavior management. It is mainly
taken into account for understanding the overall effects of human factors.

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Attitude is somehow manifested by Behaviour, apart from this there are some other
aspects of behavior that can displace attitude (Daniel and Owen, 2017). There are mainly two
ways by which extreme situation can be understood that is good and natural.
Favorable or Neutral Situation: In a given situation or environment is perceived then it
can result in either positive or negative. Overall behavior is completely drive by attitude. In the
matter of choice of individual or even in group it is considered to be as the key determinant
(Gerrans, Faff and Hartnett, 2015). When the issues are encountered with present client who has
the possibility of taking new business for an organization then they come an opportunity to
pursue or ignore it.
Unfavorable or hostile Situation: There are many instances when an individual or even
group can receive a situation which is negative. The resulting behavior can be understood by
direct response for any given situation where attitude will play a key role (Goswami, 2016).
There are many individuals who can adopt the behavior which is driven by the current perception
that has negative environment.

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Fig 1: Risk Attitude Spectrum
(Source: Davidson, Dey and Smith, 2015)
Need to build a good Risk Culture with your project team
Properly designed diagnosis can help the organization around the globe to measure and
manage their risk culture. It is mainly done for meeting regulatory expectation and overall
improvement of financial performances (Bernile, Bhagwat and Rau, 2017). The overall need for
measuring and improving the given risk culture in financial organization around the
organization. There is need of placing much more emphasis on the organization that focuses on
effective risk management culture. Risk culture is considered to be responsibility for any kind of
leadership team due to critical and proper management of business. Poor risk culture in
organization culture for any kind of financial loss (Fraser and Simkins, 2016). It can easily result

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in high profile issues in various financial sectors. There are many regulatory, agencies and
stakeholders who focus on risk culture for analyzing whether risk is handled properly or not.
Organization understands the importance of risk culture for understanding the importance
that has struggled in the earlier days. It is a best method for analyzing and tracking of given
process in the given time. Core characteristics mainly come into action from effective risk
culture that is inclusive of leadership and corporate governance (Pan, Siegel and Wang, 2017).
Risk Culture does not need to be separated the complete organization culture as risk needs to be
embedded. It is considered to be as an element which requires special and specific attention.
There is large number of challenges associated in measuring risk culture in an effect which is
linked to organizational features.
There are number of elements that are associated with risk culture. It is mainly needed for
interviews with senior stakeholders of the organization like executives, leaders, and boards
(Heckmann, Comes and Nickel, 2015). Apart from this, it focuses on group of team managers,
risk managers and lastly risk takers. It can be taken as a valuable insight more specifically for the
organization for understanding the risk culture.
Good risk culture look like
In the year 2012, there is large number of international banks that provided a trading loss
for synthetic portfolio. It is their own admission for the event that can result in overall loss for
the organization like inadequate idea about the traders (Daniel and Owen, 2017). Apart from this,
there are many other ineffective challenges for the judgment of the traders which is done for risk
function. An effective risk culture helps in rewarding both groups and individuals for analyzing
risk in proper way (Gerrans, Faff and Hartnett, 2015). Successive risk culture is mainly inclusive
of

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 Clear and consistent tone right from the top that is board and senior management. It is all
about risk-taking that is positive and beneficial. It aims in removing or controlling of risk
that are negative in nature (Goswami, 2016).
 Taking account of list of stakeholders in the whole process of decision making.
 Common acceptance of the organization is known to be most important thing in risk
management like clear accountability of specific risk.
 Encouragement of risk event that is report and whistleblowing is mainly seen from
mistakes and is never missed.
 No other process or given activity is considered to be too large for the risk to be taken
into account.
 Risk Management skills and knowledge value is encouraged and completely developed
by risk management function (Davidson, Dey and Smith, 2015).
 There is a need for proper diversification of perspective along with beliefs and values for
understanding status go is rigorously challenged.
 There is a need for commitment to various ethical principles (Bernile, Bhagwat and Rau,
2017).
 There is a need for cultural engagement along with employee engagement.
Conclusion
From the above pages, the point can be concluded that this report is all about risk culture
and risk attitude. In the report, the overall effect of risk culture and risk attitude on the overall
outcome of risk management. The overall influence of risk attitude on risk culture and vice-versa
has been discussed in details. An explanation has been provided with respect to the need for
building a good risk culture in the project team. The last section of the report deals with risk

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culture and associated benefits. It ultimately helps in shaping the risk decision of management
and employees. Risk culture is known to be a common understanding of the organization and
purpose of the business. Organization around the globe has made huge amount of developments
that comprises of processes and framework and lastly standard for managing the risk. Risk
culture can be considered to be formidable which aims in improving the overall performance of
risk management. It is due to fact that management can have better understanding or not. Risk
culture tends to develop with the evolution of organization. It mainly makes use of some
particular sense for any organization, where it makes use of sense for organization for making
use of self-assessment methods. It mainly focuses on groups and other techniques for having an
understanding with respect to present to risk culture in any organization. Tone of the
organization can be stated as collective impact on the top, middle and lower part of risk
management. Communication from top-level tends to have little impact over the employees of
the organization. Much greater in the level of management can have greater number of risk
irrespective of its level. The intangible mechanism tends to have huge amount of impact on the
organization inclusive many things like risk governance structure.

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References
Bernile, G., Bhagwat, V. and Rau, P.R., 2017. What doesn't kill you will only make you more
risk‐loving: Early‐life disasters and CEO behavior. The Journal of Finance, 72(1), pp.167-206.
https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=5222&context=lkcsb_research
Daniel, E. and Owen, R., 2017. Self-efficacy and attitude to risk in the home-based self-
employed: A longitudinal exploration.
https://oro.open.ac.uk/53705/3/53705.pdf
Davidson, R., Dey, A. and Smith, A., 2015. Executives'“off-the-job” behavior, corporate culture,
and financial reporting risk. Journal of Financial Economics, 117(1), pp.5-28.
https://www.nber.org/papers/w18001.pdf
Fraser, J.R. and Simkins, B.J., 2016. The challenges of and solutions for implementing enterprise
risk management. Business horizons, 59(6), pp.689-698.
http://isidl.com/wp-content/uploads/2017/08/E4745-ISIDL.pdf
Gerrans, P., Faff, R. and Hartnett, N., 2015. Individual financial risk tolerance and the global
financial crisis. Accounting & Finance, 55(1), pp.165-185.
https://s3.amazonaws.com/academia.edu.documents/43340175/pdf.pdf?
AWSAccessKeyId=AKIAIWOWYYGZ2Y53UL3A&Expires=1554474617&Signature=YtkWJI
mXV%2BhsEVThDfIsp6F5XUc%3D&response-content-disposition=inline%3B%20filename
%3DIndividual_financial_risk_tolerance_and.pdf
Goswami, B., 2016. Factors Affecting Attitude of Fish Farmers towards Scientific Fish Culture
in West Bengal. Indian Research Journal of Extension Education, 12(1), pp.44-50.
http://seea.org.in/ojs/index.php/irjee/article/viewFile/348/346

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Heckmann, I., Comes, T. and Nickel, S., 2015. A critical review on supply chain risk–Definition,
measure and modeling. Omega, 52, pp.119-132.
https://brage.bibsys.no/xmlui/bitstream/handle/11250/2381426/Omega_2015.pdf?sequence=3
Hillson, D. and Murray-Webster, R., 2017. Understanding and managing risk attitude.
Routledge.
Murray-Webster, R. and Hillson, D., 2016. Managing group risk attitude. Routledge.
http://llrc.mcast.edu.mt/digitalversion/Table_of_Contents_134061.pdf
Pan, Y., Siegel, S. and Wang, T.Y., 2017. Corporate risk culture. Journal of Financial and
Quantitative Analysis, 52(6), pp.2327-2367.
https://www.lebow.drexel.edu/sites/default/files/event/1444220803
pswcorporateculture20151005.pdf
Short, J. and Sikora, I., 2016. Hazard Identification In Part-145 Approved Maintenance
Organisations: The Management Of Risk Attitude.
http://openaccess.city.ac.uk/16854/1/Johnny%20Short%20%20ZIRP
%20Submission__Mar_2016.pdf
Wang, M., Rieger, M.O. and Hens, T., 2017. The impact of culture on loss aversion. Journal of
Behavioral Decision Making, 30(2), pp.270-281.
https://www.researchgate.net/profile/Mei_Wang8/publication/
293045101_The_Impact_of_Culture_on_Loss_Aversion/links/5b7153cfa6fdcc87df739813/The-
Impact-of-Culture-on-Loss-Aversion.pdf