This is Day 2 of the Risk Culture Week. Today in the spotlight, we share with you the following Guidance Document.
Why read this?
Perhaps this was the first major regulatory attempt to correct the failings of the global financial crisis (GFC) in 2007/8. Risk management that does not address risk-taking culture, is not effective. The paper sets out a simple definition and framework for measuring risk culture and would be a useful thought-starter for any organization wanting to attempt to do this.
Based on the observation that risk management as a corporate governance framework simply failed to work, the Financial Stability Board issued proposed guidelines on risk culture for financial institutions, to discuss the manner in which regulatory supervisors formally assess risk culture at financial institutions.
While focusing on risk culture in the financial sector, this Guidance Document presents a comprehensive framework aiming at understanding and assessing risk culture that can well become relevant for other non-financial organizations. According to the Guidance Document, key components of risk culture are risk governance, risk appetite and compensation.
Download here to learn more (it’s for free)
Financial Stability Board (2014)