How to build a risk-aware culture in your organization?

Can people in your organization freely discuss what might go wrong without hesitation? Do you still think system-centric when you hear the words risk and security? Are your employees risk-avoidant or calculated risk-takers? The answers can be indicative of your organization’s risk culture. This culture is the sum of shared values, attitudes, and behavior that helps drive organizational outcomes.

In a world where attackers take seconds to exploit a vulnerability, your risk response strategies must be agile. Achieving this requires a risk-conscious mindset, where decisions are approached with risk considerations upfront. That is why investing in building a risk-aware culture that rewards you long-term and weaves a strong security fabric where people think risk-first is crucial.

This blog offers actionable insights on cultivating such a culture, along with the benefits and challenges you may encounter.

What is a risk-aware culture?

A risk-aware culture is an organizational mindset where people display a shared commitment and accountability to identifying, assessing, and mitigating risks. It enables the organization to minimize uncertainties, build resilience, and capitalize on opportunities.

Importance of risk-aware culture in compliance and cybersecurity

A risk-aware culture plays a crucial role in building the right behavior among employees and making the most of technological safeguards.

Organizations often focus too much on technical controls, assuming their biggest security threat is a faceless hacker. However, more often than not, employees set weak passwords, write them on sticky notes, and click on phishing links. Compliance and cybersecurity aren’t just technical problems, they are closely related to people and processes. Humans are often considered the weakest link in security, which is why building a risk-aware culture is so beneficial.

A risk-aware culture instills values of ownership and accountability, encouraging the right actions to identify potential threats, analyze them, and trigger an appropriate response. It makes employees more mindful of their behavior and fosters proactive reporting and issue resolution

How to build a risk-aware culture?

A risk-aware corporate culture results from altering deep-rooted beliefs within the workforce that prevent them from considering potential risks when evaluating initiatives and outcomes. Creating this culture requires a combination of measures: addressing the value system and implementing robust procedural changes that ensure risk is integrated into daily activities.

Here are six step proven formula to build a solid risk-aware culture:

1. Understand the current state and identify your ideal state

Diagnose the organization’s current culture to clarify the desired state. The diagnosis will involve analyzing current procedures for identifying and tackling risks and understanding employee attitude and behavior.

The following questions will help:

• Do the current policies and SOPs align with industry best practices and standards?
• How frequently are risk awareness training sessions organized?
• Are there procedures for post-incident analysis?
• What are the stakeholder perspectives on current risk practices?
• How deeply is risk culture ingrained in the organization?

Additionally, analyze the KPIs and KRIs to understand how effective the current practices are.

This data, feedback, and understanding will lay the foundation for ‘desired state’ objectives and action plans.

2. Communicate the values and expected behavior

Attitude and behavior directly impact the culture, so senior management must clearly communicate where they want to reach and what behavior is expected.

In an interesting story, international thought leader David Hillson, also known as the Risk Doctor, narrates how back in 2000 when he worked in a construction company, the CEO sent a video message to the team spread across the world. The message focused on how he will take more calculated risks to thrive in the industry and what he expects from his employees. It helped set the tone at the top and inspired employees to contribute their best efforts to meet expectations.

So, it’s crucial to have transparent communication and engage stakeholders right from the start.

3. Lead by example

As much as communication is key, senior management must set an example in action. A simple way to do this is to explain every decision using a risk-reward approach. This demonstrates that the Board of Directors are taking calculated risks when trying to conclude important matters. Gradually, you’ll start seeing functional leaders adopt this and the impact will trickle down.

4. Implement a combination of soft and hard measures

Combining soft and hard measures is the most effective way to build a risk-aware culture. Soft measures focus on cultural and behavioral changes that influence mindset, while hard measures are formal and structured processes to enforce risk management activities. Soft measures include training and awareness programs, sharing stories of cultural shifts, and updating job descriptions to emphasize the need for a risk-first attitude.

On the other hand, hard measures include implementing policies, using risk management tools, conducting internal audits, and calculating risk-adjusted performance for individuals, compelling them to prioritize risk in their decision-making.

5. Reward the change champions

While a top-down approach can be effective, accelerating the process requires change to come from the ground up. To achieve this, recognize and reward change champions through monetary incentives and public appreciation. This motivates other teams to take initiative, driving change from the bottom up.

6. Reassess and course correct after a period

After implementing all the necessary measures, observe the impact over a period of 6-12 months. Reassess the changes in workforce attitudes and behaviors and review the metrics. This will help you identify any remaining gaps and guide corrective actions. An integrated dashboard can be useful, serving as your single source of truth.

Check out Sprinto’s integrated dashboard:

Benefits and challenges of building a risk-aware culture

Benefits

Building a positive risk culture can reward you through quick responses, enhanced stakeholder engagement, less resistance to changes, and continuous compliance management.

1. Agility and proactiveness

A risk-aware culture fosters agility and proactiveness, which are crucial in cybersecurity. It equips employees with the knowledge and skills needed to identify risks early, preventing them from escalating into disruptive incidents. Employees enhance accountability and improve response times by taking ownership and acting decisively.

2. Transparency and engagement

A risk-aware culture thrives on openness and increased stakeholder engagement. A shared understanding of the risk environment enables transparent communication about org-wide risks. Employees across functions participate in identifying and mitigating risks and facilitate better cross-functional collaboration. These collaborative efforts help bring in diverse viewpoints and enhance the organization’s problem-solving abilities.

3. Compliance adherence

Employees taking the risk-first approach are more aware of the regulatory requirements. They also understand how their actions impact compliance and how a misstep translates into a business loss. As a result, they support initiatives like internal audits, security training, reporting, and feedback and ensure better compliance adherence.

4. Adaptability and resilience

A risk-conscious environment ensures systematic processes to handle unexpected events. The situational awareness and enhanced preparedness make the team adaptable to evolving changes. It also fosters continuous improvement, where functions learn from past incidents and adjust their strategies accordingly. This contributes to organizational resilience over time

Challenges

Building a risk-aware culture is a slow process and can take years as it comes with its challenges. 

Take a look at these top four challenges:

1. Stakeholder resistance

The stakeholders, particularly those who have stayed long enough to be accustomed to existing processes, often resist the change. The new policies, processes, and mechanisms come across as added bureaucracy and a means to slow down operations. Additionally, they do not see the immediate value of building the culture and act resistant.

How to solve it?

• Articulate the value of building a risk-aware culture by showing quick wins, such as a prompt issue resolution.
• Engage stakeholders in the strategy to inculcate ownership.

2. An overly cautious workforce

Sometimes, a risk-aware culture can become overly focused on avoiding risk due to a fear of failure. This may lead to analysis paralysis and a slow decision-making process, as employees spend too much time evaluating risks. An overly cautious workforce can also miss opportunities and limit innovation.

How to solve it?

• Reward initiative to encourage experimentation and emphasize that not all risks are harmful
• Communicate the risk tolerance levels so employees understand that risk aversion is not always desired

3. Lack of unified understanding

Another common challenge is the lack of consistent risk perception across departments. This affects risk assessments, communication, and collaboration on responses. As a result, the organization may struggle to establish a clear risk appetite and may have conflicting mitigation strategies.

How to solve it?

• Use a standardized risk framework to ensure consistent procedures for identifying and mitigating risks
• Have centralized dashboards and communication tools to prevent misinterpretation of risk data

4. Continued engagement

Organizational energy and commitment are usually high initially, but maintaining continuous engagement can be challenging. Employees may perceive an overload of risks as overwhelming, leading to risk fatigue. Other priorities, such as product enhancement or customer experience, may take precedence.

How to solve it?

• Integrate risk management with daily operations to make risk activities a regular process.
• Establish a regular feedback loop to encourage continued participation.

Systematically manage risks with Sprinto

If you want your organization to think risk-first, risk management must be integrated into existing operations. Having risk as an independent function makes the organization myopic and does not provide a comprehensive understanding of the environment. Intertwined GRC processes can solve this, and that is why companies are moving from legacy tools to integrated platforms. Enter Sprinto.

Sprinto is an automation-powered and integration-enabled GRC platform that helps you ensure better governance, solid approach to risk management and effortless compliance.

• Want to roll out risk policies? In-built templates and automated distribution can help
• Need to understand risk profiles and visualize the impact of risks? The integrated risk dashboard will make it a breeze
• Aim to enhance accountability? Assign risk owners and focus on high-value tasks
• Need practice mitigation and response? Automated triggers will keep you on track
• Require quick reports? The centralized dashboard will provide a quick snapshot
• Wish to demonstrate your security and compliance posture? The complementary trust center profiles will make it easy

The platform helps you enhance the scope of your programs with continuous control monitoring, compliance training modules, automated evidence collection, role-based task assignment and senior management reviews.

Take the first step to build a strong risk-aware culture with Sprinto.

FAQs

What are the five characteristics of a strong risk culture?

The five characteristics of an effective risk culture are attitude, accountability, open communication, commitment to risk management and continuous learning and adaptation.

What is the ABC model of risk culture?

The ABC model is a framework that explains how a culture (C) is driven by attitude (A) and behavior (B).

• Attitude indicates how people view risk management and what are their perceptions.
• Behavior refers to the actions that people take to manage risks.
• Culture is a shared value that impacts risk management activities in the organization and is shaped by attitude and behavior.

How can we demonstrate a risk culture?

You can demonstrate a risk culture to your clients and partners through:

• Showcasing certifications such as ISO 27001 and SOC 2 to assure them of benchmarked practices.
• Communicating success stories of how risk management practices mitigated a particular risk
• Offering insights on risk management through forums, social media and newsletters
• Collaborating with industry experts and conducting webinars to raise awareness

What are the different stages when building a risk management culture?

Every organization goes through 3 key stages when building a risk culture—culture awareness, change and improvement.