The Cultural Revolution in Risk Management
AbstractFollowing much debate among regulators and in society more broadly, it is now widely acknowledged that inadequate risk culture was a key contributor to the global financial crisis of 2007—08 and more recent corporate banking scandals. While there is now a growing consensus that something must be done to address behavioral risks, uncertainty remains around what exactly is meant by “risk culture” and how to “strengthen” risk culture. In this paper, we provide some clarity around the concept of risk culture, and propose a model and approach for assessing and strengthening it. The basis of our model is that risk culture is not static — it can be managed and shaped to provide a competitive advantage, allowing a company to achieve its objectives within the stated risk appetite.
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Bibliographic InfoArticle provided by EY Global FS Institute in its journal Journal of Financial Perspectives.
Volume (Year): 1 (2013)
Issue (Month): 1 ()
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Risk Culture; Risk Appetite; Financial Services; Behavioral Risk;
Find related papers by JEL classification:
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
- M14 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
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