Risk culture perceptions in a government financial institution
Abstract
Risk culture as a research subject emerged after the 2007–2009 global financial crisis. It is widely believed that losses realised during the financial crisis were not due to inadequate risk management systems but were related more to the practices and cultures of risk management. To manage risks effectively, an institution has to establish a sound risk culture and the public sector is no exception. The aim of the study was to investigate the risk culture perceptions held in a South African public institution by comparing those of head office and regional offices as well as those of management and non-management. The government financial institution are responsible for the wellbeing of its stakeholders. It is therefore important to assess the risk culture within the organisation to instil stakeholder confidence. The data were collected using the UARM Risk Culture Scale (RCS). The RCS measured two factors: Factor 1 – perceived level of integration of risk in decision-making processes; and Factor 2 – comfort with own risk management role. 102 valid sample responses were analysed. The results indicated that risk culture perceptions between head office and regional offices did not differ, whereas there was a difference between management and non-management employees. Surprisingly, there were high levels of “I do not know” responses in non-management and at head office; particularly about rewards and penalties for taking risks. Recommendations from participants point to useful opportunities to improve accountability and enhance risk communication. A third of participants felt that accountability for inclusion of risk when making decisions, will contribute most to improve risk management culture and could form the basis for further research.