Revamping Risk Cultures

Too few firms give behavior the attention it deserves. The behavioral dimension of a risk culture is often more difficult to detect and address than blatant misconduct. A trickle of low‑level transgressions and oversights can erode a firm’s value over time.

Neuroscience has shown that changing or developing a behavior is different from learning or doing a task. To address the behavioral neural networks where beliefs and habits reside and to “rewire” them, individuals and teams must be taken on a journey led by their company’s board of directors and top management. It is also an integral part of risk culture that should be at the top of every company’s “fix-it” list.

Bill Heath, a London-based partner in Oliver Wyman’s Energy practice, Kevan Jones, a London-based partner and head of Oliver Wyman’s People Effectiveness practice, and Sir Hector Sants, a London-based partner and vice chairman of Oliver Wyman’s Public Policy practice, on why it’s time for companies to focus more on behavioral blind spots.

Risk Culture and Personnel Behavior

Companies can apply different approaches to strengthening risk culture. The diagram below indicates what personnel behavior might look like depending on which types of initiative are prioritized.