Measurement of Risk Culture in General Insurance Companies in India – An Empirical Validation Using a Causal Model

This study first examines the dimensions of organizational risk culture as a latent factor, measures its robustness, and assesses its impact on risk management performance through empirical validation in the insurance industry context. Building upon existing literature, a conceptual model is developed with five exogenous factors – “leadership commitment and support,” risk governance,” “risk awareness and communication,” “competency and resources,” and “performance review and rewards’ as antecedents of organizational risk culture and risk management performance as an endogenous factor. Using a descriptive research design and a comprehensive thirty-one-item scale, we collected primary data from Indian general insurance companies to validate the causal model of risk culture using structural equation modeling (SEM). The results indicate that ‘leadership commitment and support’ is the foremost determinant of risk culture, followed by competency and resources, risk governance, and risk awareness and communication. The analysis further reveals that risk culture strongly impacts the risk management performance in the Indian insurance sector. In addition to demonstrating empirical evidence, the study also provides the risk culture assessment tool to risk management practitioners from the insurance industry.