Governance and culture

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Governance and culture

Implementing risk transformation in financial institutions

As a cornerstone of risk transformation, governance and risk culture can be relatively straightforward to define in risk policies, codes of conduct, and ethical guidelines, but challenging to implement and maintain.

Risk governance establishes roles, rules, and parameters and instils rigour in decisions and activities. Risk culture focuses on social, motivational, and real time pressures, which can be resistant to change through governance alone; however, governance does much to inform and shape risk culture. From a leadership standpoint, conscious alignment between risk governance and risk culture is an imperative for risk transformation.

It is believed that financial institutions that do the best job of managing risk will secure a competitive advantage vis-à-vis their peers. Therefore, in the current business, economic, and regulatory environment, risk transformation should stand as a high priority. Governance and culture represent a key cornerstone and an excellent starting point for a risk transformation initiative.

Governance and culture: Implementing risk transformation in financial institutions
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