What is it about?
The Position Paper Governance and Risk Culture offers a holistic view of “risk culture & culture risk”, blending regulatory, organizational and operational perspectives. It begins by distinguishing risk culture – the shared values, norms and behaviors that drive conscious risk-taking – from culture risk, i.e. the risk that arises when declared principles diverge from actual practices. Without a robust risk culture, culture risk becomes a potentially lethal threat to an institution’s sustainability.
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Why is it important?
The document presents risk culture not as a mere compliance requirement but as a competitive advantage: by embedding sound risk culture into performance management, institutions can balance growth, innovation and long-term resilience, safeguarding the trust of clients, investors and supervisors
Perspectives
The purpose is to suggest a primer for culture risk, aimed at outlining actionable and practical approaches distinguishing between ‘risk culture’ and ‘culture risk’. The topic, originally addressed by the Financial Stability Board (FSB, 2014), has recently garnered renewed interest due to the Draft Guide on Governance and Risk Culture disseminated by the European Central Bank (ECB, 2024), setting out supervisory expectations, informed by the Capital Requirements Directive (CRD), European Banking Authority (EBA) guidelines, and international standards. Therefore, the purpose is to move beyond the abstract boundaries of principled statements, striving instead to establish a framework that forms the logical foundation for properly managing the culture risk. The stated insights may serve as a roadmap for risk managers who are tasked with addressing a significant and, in many respects, fundamental challenge.
Prof. Rosa COCOZZA
Universita degli Studi di Napoli Federico II
Read the Original
This page is a summary of: Governance e Risk Culture, June 2025, Italian Association of Financial Industry Risk Managers (AIFIRM),
DOI: 10.47473/2016ppa00048.
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