Risk Culture

Mindset and behavior: Can you improve on your risk culture?

When members of an organization have a similar attitude and understanding about risk, those ideas and behaviors are described as the organization’s “risk culture.”

Since that culture is an element of the governance, risk and compliance landscape, it is something financial regulators in many countries have begun to examine more closely. This includes the European Central Bank (ECB) and the German Federal Financial Supervisory Authority (BaFin). Authorities are taking a closer look at risk-management practices and deficiencies in internal control systems as potential parts of the problem of systemic risk.

We offer:

BDO has developed a set of tools to help you meet regulatory risk-culture standards. Often, that begins with health checks and structured risk-culture surveys that will give you a deeper understanding of the risk culture within your organization. With that understanding, we help you develop the risk culture that is right for you and monitor that culture. We do this with our risk culture model that includes frameworks, structures, and the setting and monitoring of expectations and behavioral norms.

Our model draws on a paper by the Financial Stability Board (FSB) published in April 2014 called Guidance on Supervisory Interaction with Financial Institutions on Risk Culture. That guidance covers an appropriate “tone from the top,” accountability, effective communication, escalation procedures, and employee incentives. It also provides indicators for risk culture.

With a team of experts BDO can design and optimize an adequate risk culture for financial services and also audit whether a risk culture is effective and meets regulatory requirements or not.