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

Posted: 25 Nov 2014 Last revised: 12 May 2016

See all articles by Elizabeth A. Sheedy

Elizabeth A. Sheedy

Macquarie University Department of Applied Finance; Financial Research Network (FIRN); Macquarie University, Macquarie Business School

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 ( email )

Room 739, 4 Eastern Road
Macquarie University
North Ryde, NSW 2109
Australia
61-2-9850 7755 (Phone)
61-2-9850 7281 (Fax)

Financial Research Network (FIRN)

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

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

Macquarie University, Macquarie Business School ( email )

New South Wales 2109
Australia

Barbara Griffin

Macquarie University - Department of Psychology ( email )

United States

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