Risk Culture Eats Strategy for Breakfast, Too

Peter Drucker, the founder of modern management, articulated succinctly: “Culture eats strategy for breakfast.” The same holds true for risk culture, however, after some landmark oversight cases and accounting scandals of the late 1990s and early 2000s, a shift occurred in the then-emerging field of Enterprise Risk Management (ERM) in firms, denoted in part by the reframing of the phrase “risk culture” from being opportunistic and innovative in pre-financial crisis (2007-2009) to something that is both dangerous and harmful in post-crisis.

ERM consequently became focused on the auditing or the accounting fields, or both, emphasizing processes and organizational structure as best practices for ERM, and therefore became the “risk management of nothing.” In this session, Tara Kenyon shows how a country’s culture—be it risk-taking or risk-averse—strongly influences organizational strategies not only for risk management but, more broadly, also for overall business strategies and decision-making.