Culture eats compliance for breakfast: Why team culture is the key to risk management

  • Culture suffers and risks occur when there is a fundamental disconnect between an organisation’s espoused values and the operational reality.
  • Compliance mechanisms alone are insufficient to achieve a sound culture and to inoculate the organisation against major ethical failures.
  • Every board decision is nudge the corporate culture in the right direction.

Letters spelling 'culture' on meeting room table

This year, dishonesty in our banks and abuse in our institutions uncovered by royal commissions, the protection of misogynist ‘talent’ in the entertainment industry exposed by the #metoo movement, and the (less traumatic) cheating by the Australian Cricket team, have all highlighted the risks that culture can pose to the achievement of organisational goals.

These industries and organisations had no notable lack of rules or compliance systems. In every case, there were policies and procedures that prohibited the frauds, fabricated reports, abuses and cover-ups, but cultural norms and power dynamics within the organisation allowed illegal or inappropriate conduct. In every case, a media storm ensued, senior leaders resigned or departed, and boards were criticised for insufficient oversight of what was really occurring on their watch.

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