Exco Finance Insurance

How to cultivate a risk intelligent culture in financial services organisations

VUCA – an environment of relentless Volatility, Uncertainty, Complexity and Ambiguity. Economic instability, increasing competition from non-traditional invaders, a plethora of regulatory change, and new roles for the Board and executive teams – Financial Services Institutions are operating in high speed, dynamic and ever changing times. How do we prepare ourselves in an unforgiving, competitive world, where the stakes are high? Do we batten down the hatches and wait for it to pass, or do we don our protective gear and launch ourselves into the turbulence? How do we continue to grow our businesses, be innovative and yet still manage the risks of operating in this new climate?

Our new piece, titled: Fit 4 VUCA: Towards a Risk Intelligent Culture examines how Financial Services Institutions can align their risks to support their environment, strategy, business model, business practices, risk appetite and risk tolerance. Our experience tells us that there has been progress in revamping governance practices and establishing infrastructures, but that there is still a considerable need for cultivating risk-intelligent cultures within the African Financial Services Sector.

Essentially, a risk-intelligent culture exists in an organisation when its employees’ understanding and their attitudes towards risk lead them to consistently make appropriate risk-based decisions. It is not about avoiding risk but rather about accepting the need for sufficient risk in order to create value. Risk management should not be limited to specific business areas and should not operate only as an audit or control function. It is not a reactive mind-set; it is about anticipating what could happen in the environment. It is about embedding this mind-set and these behaviours in the way an organisation operates, and it covers all areas, levels and activities.

So what are the characteristics of a strong risk culture? These can be summarised as follows:

  • Commonality of purpose, values and ethics
  • Universal engagement and application
  • Learning organisation that emphasises risk culture
  • Timely and honest communications
  • Understanding the value of effective risk management
  • Responsibility and accountability, both individually and collectively
  • Encouraging an environment of constructive challenge

The first step is to understand the existing risk culture and to measure how well it supports the organisation’s risk strategy and risk management approach. The Deloitte Risk Culture Framework and corresponding Risk Culture Survey provide a structure and process to help clients in their efforts to achieve this measurement.

Prepare and enable your organisation to lead, respond and set the standard for others. Activate your employees so they become active citizens and integral parts of the team, with a sense of personal responsibility in terms of winning the game.

To read more about the Deloitte Risk Culture Framework and corresponding Risk Culture Survey.

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If you have any questions or require more information feel free to contact Colin Smith at colsmith@deloitte.co.za


About the author

Deloitte South Africa

Deloitte is one of the country's leading professional services firms in Southern Africa, and is dedicated to assisting companies succeed in the business environment- whether it be through our tax, audit, consulting or financial advisory services.

At Deloitte, we understand that solutions are not just a static one dimensional report, but rather, an integrated and innovative answer that helps our clients to better understand key complex industry issues. Not only do our solutions assist our clients in making strategic business decisions, but our unique approach also allows companies to succeed in a competitive business environment by staying ahead of industry trends. Through the collective expertise of nearly 3600 people in 8 cities in South Africa and in 16 cities in Southern Africa, and as a member firm of the global organisation Deloitte Touche Tohmats, we have access to deep insightful and intellectual capital of more than 150 000 people worldwide.

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