Risk Culture Is a Necessary Condition for Enterprise Risk Management to Succeed

Abstract

Risk culture is essential for the success of enterprise risk management (ERM). Enterprise risk management is different from silo risk management where risks were mainly managed by one department. Enterprise risk management means that the risk management is integrated from Board to the last employee of the organization. This is much easier said than done. This means that every employee of the organization has a role to perform as a risk manager; this is essentially the essence of the three lines of defense model. It is not just important for a business to achieve the sales objective and other key performance parameters, but the real question is long-term sustainability which comes from managing the risks. This article touches upon the different aspects of risk culture which is a building block of the success of ERM currently prevailing essential for developing a good risk management practice.