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The Challenge of Change: How Organizational Culture Intersects with Risk Management

Explore the relationship between organizational culture and risk management. Understand the characteristics of culture and its importance in driving behavior and attitudes. Discover how culture can inhibit or enhance organizational initiatives and learn strategies for bridging cultural gaps.

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The Challenge of Change: How Organizational Culture Intersects with Risk Management

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  1. The Challenge of Change: How Organizational Culture Intersects with Risk Management Joey Sylvester, Arthur J. Gallagher & Co.

  2. Agenda Introduction What is culture? Characteristics of culture Importance of culture Effect on Risk Management Change

  3. Background Master of Arts in Industrial/Organizational Psychology – New York University Enterprise Risk Management Consultant with Gallagher Member of US Technical Advisory Group to ISO 31000 – the international Risk Management standard Member of Human and Cultural Factors ad hoc group to ISO 31000

  4. Why has Culture gained Prominence?

  5. Why has Culture gained Prominence?

  6. How people describe culture Group norms Values Rules of the game (“the ropes”) Shared meanings Rituals and celebrations

  7. What is Culture? “A pattern of shared basic assumptions that was learned by a group as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.” - Schein, 2004

  8. Levels of Culture Levels of Culture Artifacts – Visible “products” of the group (organizational structures, processes, language, value statements) Cannot infer meaning at this level Manifest Manifest Patterns of Behavior – Familiar Mgt tasks; visible and audible behavior patters; norms Latent Espoused Beliefs and Values – strategies, goals, philosophies Underlying Assumptions – Unconscious, taken-for-granted beliefs, perceptions, thoughts, and feelings

  9. Visible artifacts – norms behaviors What is going on here?

  10. Visible artifacts – norms behaviors Personal values and attitudes Why are we doing what we are doing?

  11. Visible artifacts – norms behaviors Personal values and attitudes Cultural values and shared assumptions Do the values fully explain the artifacts?

  12. Culture Formation Groups start with originating event Define crude group boundaries (who’s in, who’s not) Initial behavior of the group reflects individual motivations, assumptions, and intentions

  13. Culture Formation Basic assumptions start as behavioral norms Reinforce by: Positive problem solving Anxiety avoidance Leadership values and beliefs instilled at the beginning

  14. Leadership and Culture What leaders pay attention to, measure, and control on a regular basis How leaders reach to critical incidents and crises How leaders allocate resources Deliberate role modeling, teaching, and coaching How leaders allocate rewards and status How leaders recruit, select, promote, and fire

  15. Leadership and Culture Org. design and structure Org. systems and procedures Rites and rituals Design of physical space, buildings Stories about important events and people Formal statements of philosophy, creeds, charters Schein, 2004

  16. Characteristics of Culture Structural stability Depth Breadth Patterning or integration

  17. Human Nature Individuals will hold on to certain basic assumptions in order to ratify membership in the group We will resist change because we do not want to deviate from the group, even if we think privately that the group is wrong

  18. Why is Culture Important? Culture can inhibit or enhance organizational initiatives Culture drives behavior Culture drives attitudes and beliefs Culture can have drastic consequences for overall performance

  19. Typical Cultural “Roadblocks” “My organization is very siloed” Lack of Risk Ownership – “that’s not my problem” “It’s always been this way” “Accidents happen”

  20. Culture and Risk Management Culture drives behavior ... And behavior related to risk management Risk Management should align with overall organizational culture

  21. Example Construction site

  22. Can culture be changed? Yes, but...

  23. A few successful ideas for bridging cultural gaps: Create a Risk Advisory Committee to increase communication and cross-silo problem solving Find ways to support appropriate risk taking – and be sure that people hear about it! Facilitate risk-based decision making processes with stakeholders (for projects, individual decisions, areas of risk, etc.)

  24. Summary and Questions

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