Risk Culture

Abstract

This article focuses on various facets of Risk culture of institutions and more specifically the financial institutions engaged in risk intermediation and risk taking, in the context of their risk management activities. The term ‘Risk Culture’ refers to the values, beliefs, knowledge and understanding about risk shared by a group of people engaged in common pursuit ideally in the spirit of camaraderie. Great risk management cannot flourish in stinking risk culture. Instances are not few wherein notwithstanding robust risks management system in place institutions were failed by prevalent toxic risk culture. Intelligent risk culture is sin qua non for effective risk management to create and deliver sustained values. Competitive advantage would accrue to institutions that would be successful in demonstrating better culture, better conduct, in terms of better client reputation and ability to attract and retain skilled staff and attract investors. Of late institutional risk culture has been receiving greater attention of financial sector regulators and supervisors across the world.