At first glance, it’s hard to imagine how one’s corporate culture might impact an organization’s risk appetite, but they are indeed related. Companies face hundreds of risk-related decisions every day. Without the proper culture, boards will have a tough time being confident that managers are making company-wide decisions in a thoughtful way—and in a way that respects the kinds of risks the company wants to take.
How can corporate directors get their arms around the oversight challenge of enterprise risk management? This is one of the most common questions that PwC’s Governance Insights Center receives from boards. The Governance Insights Center has begun to release a new collection of targeted publications called the Risk Oversight Series, which addresses the board’s role in risk oversight—everything from risk appetite and cultural risk to whether the board should create a separate risk committee.
In this episode, Catherine Bromilow, a PwC partner at the Center, focuses on the second publication of the series: How Can Your Board Influence Culture and Risk Appetite? She explains why cultural issues are often hard for corporate directors to spot. Most importantly, Bromilow outlines three strategies boards can use to identify red flags in company culture before they become Business section news.