Cognitive risk culture and advanced roles of actors in risk governance: a case study

Agarwal, R and Kallapur, S (2018) Cognitive risk culture and advanced roles of actors in risk governance: a case study. The Journal of Risk Finance, 19 (4). pp. 327-342.

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Abstract

Purpose The purpose of this study is to explore the best practices for improving risk culture and defining the role of actors in risk governance. Design/methodology/approach This paper presents an exemplar case of a British insurance company by using a qualitative case research approach. Findings The case study shows how the company was successful in changing from a compliance-based and defensive risk culture to a cognitive risk culture by using a systems thinking approach. Cognitive risk culture ensures that everybody understands risks and their own roles in risk governance. The change was accomplished by adding an operational layer between the first and second lines of defense and developing tools to better communicate risks throughout the organization. Practical implications Practitioners can potentially improve risk governance by using the company’s approach. The UK regulator’s initiative to improve risk culture can potentially be followed by other regulators. Originality/value This is among the few studies that describe actual examples of how a company can improve risk culture using the systems approach and how systems thinking simultaneously resolves several other issues such as poor risk reporting and lack of clarity in roles and responsibilities.

Affiliation: Indian school of Business
ISB Creators:
ISB CreatorsORCiD
Agarwal, RUNSPECIFIED
Kallapur, Shttps://orcid.org/0000-0003-2920-6144
Item Type: Article
Uncontrolled Keywords: Corporate governance, Enterprise risk management, Risk reporting, System theory, Three lines of Defense model
Subjects: Business and Management
Corporate Governance
Depositing User: Veeramani R
Date Deposited: 28 Nov 2018 06:59
Last Modified: 06 Mar 2019 13:59
URI: http://eprints.exchange.isb.edu/id/eprint/643
Publisher URL: https://doi.org/10.1108/JRF-11-2017-0189
Publisher OA policy: http://www.sherpa.ac.uk/romeo/issn/1526-5943/
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