Is it possible to 'measure' risk culture? Yes. Organisational psychologists have developed statistically reliable survey instruments to assess other aspects of culture such as safety in construction and other industries. We know these instruments help predict important outcomes
such as 'safe behaviour' and lower injury rates. We have now produced something similar in relation to risk culture.
Why use a survey methodology? Risk culture relates fundamentally to the perceptions of employees. The two main ways of gauging staff perceptions is to use interviews or surveys. In a large firm it is not practical to interview sufficient staff to create an adequate sample for analysis.
Why do we need a 'statistically valid' tool for assessing risk culture? Without a rigorous validation process, it is not clear what a questionnaire is measuring, if anything. A reliable survey instrument will allow financial institutions to test
the uniformity of culture throughout the firm, identify pockets of 'problematic' culture, demonstrate the effectiveness of the culture (if it is strong) to outsiders and track how culture changes over time.
How have we validated the survey instruments? We have followed a three step process.
Generated an inventory of possible questions based on: analysis of the disaster cases of the past, interviews with many industry experts (consultants, supervisors, risk managers), previous research in safety culture.
Pilot tested questions to a) identify the underlying dimensions of risk culture, and b) test whether the risk culture dimensions are correlated with desirable (self-reported) risk management behaviours and attitudes in bank employees. The initial pilot study used alumni of the Macquarie Master of Applied
Finance program with a second pilot performed in an Australian bank.
A confirmatory study in a large bank completed the process.
What's involved in a risk culture assessment? The exact nature of the assessment and reporting is tailored to your requirements. The Macquarie University-based team can assist in determining your sampling strategy i.e. which particular business units should be
included. We can assess risk culture, risk behaviour and/or risk structures. A research contract has to be signed by both the university and the participating banks. This spells out the rights and responsibilities of both parties.
We use anonymous online surveys. The CEO sends out an email
to staff in the selected business units announcing the survey and encouraging candid participation. Approximately one week later emails are sent to all staff in the selected business units containing a link to the secure online survey platform. Emails are usually sent by the bank's HR function. The survey
is usually open for two weeks, with a reminder email after one week.
What about data security and confidentiality? We take these issues very seriously. We have developed protocols to protect the identity of participating banks and to protect the personal data of participating staff. More details are available on request.
What if problems are identified? A risk culture assessment may uncover issues in particular business units or indeed more broadly. We are able to provide evidence-based recommendations about possible culture remediation. We do not, however, have resources to provide ongoing remediation
programs. We are happy to work in partnership with consulting firms with expertise in this field.