GCRA

The 'Culture Problem'

Over the past decade regulated institutions have faced into a pervasive ‘culture problem’, first identified during the GFC and later underscored by the Banking Royal Commission and similar government Inquiries in other sectors.

This ‘culture problem’ typically manifests as failures in governance, risk culture, accountability, and remuneration – four interconnected elements that shape and are shaped by organisational culture.

It begs the question: Could this ‘culture problem’ be due to HR and culture experts’ inability to identify or effectively address these issues within a highly regulated environment?

The underlying root causes of this lapse remain elusive and unresolved.

To effectively support strategic objectives within risk appetite, a holistic strategy to understand and cultivate the desired culture has always been essential.

Yet, the focus on individual GCRA elements has led to divergent target states and scattered approaches across ‘3-lines’ operating models, resulting in disjointed efforts that overwhelm leaders / directors with non-specific information and detract from a meaningful resolution of the ‘culture problem’.

Implementation of a cohesive and comprehensive culture strategy should help executives and directors readily answer:

  1. To what extent am I confident the current and desired organisational culture aligns with and explicitly supports achievement of strategic goals, within risk appetite, and external conduct/compliance requirements?
  2. In what ways does current organisational culture facilitate engagement with stakeholders, and how does this engagement influence strategic decision-making and risk management practices?
  3. How intentionally do reported culture insights inform determination of residual risk (all risk classes, particularly strategic risk) and strategy execution / risk-taking capacity?
  4. Has the organisation’s implementation of remediation actions or GCRA requirements cultivated avoidable complexity or degrees of risk aversion? What does this indicate about the prevailing culture that facilitated those changes – and are those characteristics actively measured?