culture in organizations
Risk Management Practices

Addressing Culture and its Associated Risks in Financial Institutions

A Character-Infused Approach[1]

Author:

by Mary Crossan, Bill Furlong,[2] Jeffrey Gandz, and Gerard Seijts

 


The authors are independent contributors to the Global Risk Institute and are solely responsible for the content of this article.

Foreward

By Mark Caplan, President, Global Risk Institute

A strong, effective culture within an organization is widely accepted to be a fundamental source of long term sustainable competitive advantage. In the wake of the financial crisis, misbehaviour and misconduct have led to unquantifiable losses of brand value and trust amongst customers and stakeholders of the financial services industry - not to mention billions in fines from authorities.  It is no surprise then that culture risk and its management is one of the topics at the top of the agenda in financial services firms today, although the risks and opportunities have broad application to all industries.

This article, written by leading academics and practitioners provides thought leadership where the fields of leadership and culture intersect, shedding light on the challenge of better managing the many forms of cultural risk in order to improve organizational performance.  The authors urge organizations to focus on the character dimensions of all employees, and specifically those individuals in leadership roles, by adopting the principles and methodologies contained in the Ivey Leader Character Framework.  With judgment at its centre, the Framework seeks to ensure those shaping an organization’s culture minute by minute through their actions and decisions have the language, processes and tools necessary to reinforce and further an organization’s aspirational culture.

The article suggests specific actions to assess and develop each individual’s character dimensions and concludes with the steps required to develop a character-infused culture - one that is superior at managing conflict, ambiguity, threats and opportunities in order to improve risk management, achieve superior organizational outcomes, and provide a source of sustainable competitive advantage.

 


Introduction

This article focuses on the challenge of changing organizational and sub-unit cultures to better manage the many forms of cultural risk (see sidebar) and thereby improve organizational performance.  We propose that a focus on key character dimensions in all employees, but specifically those in risk leadership roles, will result in accelerated culture change, improved risk management and better organizational outcomes.  We address specific executive and governance actions to assess and develop such character dimensions.  We conclude with steps to develop a character-infused culture that will be superior at managing different types of cultural risk threats and opportunities and can be a source of competitive advantage.

 

 


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Endnotes

[1] The authors wish to acknowledge and thank Mark Caplan, president of the Global Risk Institute, and Michel Durland for their key contributions to this article.

[2] The views expressed by Bill Furlong (who is also a Commissioner at the Ontario Securities Commission (OSC)) in this article are his and do not necessarily represent the views of the OSC.