Abstract
In the previous chapter we defined risk culture and explored some of its characteristics, as well as a number of indicators of firms with a strong risk culture. In this chapter we shall build on the definitional and theoretical concepts by exploring how risk culture plays out in the real world. To begin, we shall consider why firms adopt a risk culture, analyzing the catalysts that can lead them in the direction of change. We shall then explore the results of various risk culture studies and surveys conducted over the past few years. Finally, we shall discuss some of the stakeholders that can influence a company in the area of risk culture. Specifically, we shall describe the changes that can potentially be brought about by shareholders, creditors, clients, rating agencies, industry groups and regulators. Given their importance, and to demonstrate how they can have an impact on culture, we shall focus particularly on certain regulatory and legislative frameworks that have been created in recent years.
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Notes
Risk Management Association, “RMA Announces Results of ERM Survey” (Philadelphia: RMA, 2006).
KPMG, “Never Again? Risk Management in Banking beyond the Credit Crisis” (New York: KPMG, 2009). The study included a survey of 500 senior managers from large institutions involved in risk and risk management.
Deloitte, “Global Risk Management Survey,” 6th edn. (New York: Deloitte, 2009). The survey is conducted every two years among financial institutions representing $19 trillion in assets.
See C. Levy, E. Lamarre, and J. Twining, “Taking Control of Organizational Risk Culture” (New York: McKinsey & Co., February 2010).
Moody’s, “Moody’s Risk Management Assessment Methodology” (New York: Moody’s, July 2004).
Moody’s, “Best Practices for a Board’s Role in Risk Oversight” (New York: Moody’s, August 2006).
See, e.g., S. J. Dreyer and D. Ingram, “Standard & Poor’s to Apply Enterprise Risk Analysis to Corporate Ratings” (New York: S&P, May 7, 2008).
S. J. Dreyer, “Standard & Poor’s Looks further into How Nonfinancial Companies Manage Risk” (New York: S&P, June 2010).
Standard and Poor’s, “Summary of Standard & Poor’s Enterprise Risk Management Evaluation Process for Insurers” (New York: S&P, 2007).
Institute of International Finance, “Final Report on Market Best Practices for Financial Institutions and Financial Products” (Washington, DC: IIF, 2008).
Institute of International Finance, “Risk Culture” (Washington, DC: IIF, 2009), AIII.3.
Committee of Sponsoring Organizations of the Treadway Commission, “Embracing Enterprise Risk Management” (Durham, NC: COSO, 2011), 1.
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© 2012 Erik Banks
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Banks, E. (2012). Institutional and Regulatory Considerations. In: Risk Culture. Palgrave Macmillan, London. https://doi.org/10.1057/9781137263728_3
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DOI: https://doi.org/10.1057/9781137263728_3
Publisher Name: Palgrave Macmillan, London
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