From the course: Introduction to Risk Management

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The role of risk culture

The role of risk culture

From the course: Introduction to Risk Management

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The role of risk culture

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- [Instructor] After the global financial crisis of 2008, regulators and the public reflected on how excessive risk taking at banks contributed to the depth of the economic recession that followed. This excessive risk taking is an example of the danger of not having an appropriate risk culture within a bank. So what is risk culture? Well, risk culture generally refers to the behaviors and attitudes encouraged by senior management towards risk, as well as the discussions and decisions made on risk management. It incorporates the shared values and goals embedded into a bank's enterprise risk framework. Risk culture has become an object of focus by regulators and senior management, but there's no consensus on exactly what it is or how it might be managed. It's hard to quantify risk culture because it comprises many qualitative elements. So instead, let's just focus on three elements regarded as critical to embedding a strong risk culture within a bank. Firstly, the tone at the top sets a…

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