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Risk Governance, Structures, Culture and Behaviour: A View from the Inside

Posted: 25 Nov 2014 Last revised: 12 May 2016

Elizabeth A. Sheedy

Macquarie University Department of Applied Finance and Actuarial Studies; Centre for International Finance and Regulation (CIFR); Financial Research Network (FIRN)

Barbara Griffin

Macquarie University - Department of Psychology

Date Written: July 21, 2015

Abstract

This study uses survey data to demonstrate how risk culture, over and above employee characteristics and risk structures, affects risk behaviour in banks. In 2014-2015 we surveyed employees from seven major banks headquartered in Australia and Canada. All seven have adopted best practice risk governance. On average, risk structures are perceived favourably with the exception of remuneration. Risk culture varies at the business unit level as well as by firm and country. Risk culture is a significant predictor of risk behaviour after controlling for personal characteristics and perceptions of risk structures. Further managerial and supervisory attention should be paid to culture in financial institutions.

Keywords: risk culture, risk governance, financial institutions, remuneration

JEL Classification: G21, G34, Z10

Suggested Citation

Sheedy, Elizabeth A. and Griffin, Barbara, Risk Governance, Structures, Culture and Behaviour: A View from the Inside (July 21, 2015). FIRN Research Paper No. 2529803. Available at SSRN: https://ssrn.com/abstract=2529803 or http://dx.doi.org/10.2139/ssrn.2529803

Elizabeth A. Sheedy (Contact Author)

Macquarie University Department of Applied Finance and Actuarial Studies ( email )

Room 739, Building E4a
Macquarie University
North Ryde, NSW 2109
Australia
61-2-9850 7755 (Phone)
61-2-9850 7281 (Fax)

Centre for International Finance and Regulation (CIFR) ( email )

Level 7, UNSW CBD Campus
1 O'Connell Street
Sydney, NSW 2000
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Barbara Griffin

Macquarie University - Department of Psychology ( email )

United States

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