What is Risk Culture?
The normal and typical behavior of individuals and groups within an organization that determine how they identify, understand, discuss and act on the risks of the organization.
Why is Risk Culture Important?
- Better decision-making when the impact of uncertainty is considered.
- Better recognition of diverse factors that drive risk.
- Stronger ability to adapt to a changing environment.
- Improved, proactive approach to carrying out individual responsibilities.
Risk Culture Initiative
The Risk Culture Initiative strives to improve the way we consider risk and uncertainty and to recognize the difference between risk and opportunity.
- Risk impedes or precludes goal achievement.
- Opportunity may lead to success, but requires taking some amount of risk. The key to capitalizing on good opportunities is to understand beforehand how much risk to take (risk appetite) in order to move forward.
When You Assess Risks
No matter what we do as leaders, faculty or staff, there is no guarantee of success. Stakeholders should regularly consider these questions:
Consider the short-term and long-term goals of your group and the University.
- What can go wrong so that the goal is not achieved?
Falling short of a goal can result from factors internal or external to the University.
- What are the possible outcomes?
Look for the worst-case, best-case, most-likely scenarios, and possibilities in-between.
- How robust are the assumptions underlying my plans?
Assumptions should remain valid under changing circumstances.
- Are there any unrecognized correlations among the risk drivers?
Consider relationships among risk drivers.
- Most importantly, “What is my Plan B?”
When plans go awry, but you have planned with flexibility, you know what to do ahead of time, and the negative impact of the risk may be lessened.
Last Updated: July 26, 2011