How Culture Impacts Attitudes to Risk

PARC Zoom Interactive Event:

How Culture Impacts Attitudes to Risk, Wednesday 8 July, 12.00pm BST with Anette Mikes, Professor of Accounting at Oxford Saïd Business School

The big question facing many businesses right now is when to return to the physical workplace. How do you balance the health risk of re-opening with the economic risk of not doing so? What is it reasonable for a company to do, given its duties to its employees and its shareholders? The management and mitigation of risk is therefore at the forefront of much discussion in businesses in the aftermath of the COVID-19 lockdown.

Our speaker for this event is Anette Mikes, Professor of Accounting at Oxford Saïd Business School. Anette’s current research focuses on the interface between risk management, business ethics and management control.

As she explains, risk management is as much a social and cultural issue as an actuarial one. If the assumptions and beliefs that produce society’s unwritten rules change then so will the behaviour.

“The recognition of risks – that is, picking out the relevant ones from an ever-expanding risk universe – is in fact a social process, conditioned by a culture and its values. Thus, societies and organisations are defined not so much by what risks they identify and manage, but by what they decide – whether willingly or reluctantly – to ignore”.

Anette identifies four different cultural tribes, whose views of the world lead them to have different attitudes to risk. Political and business leaders will need to manage the interaction between them carefully:

“One good way to think of responses to the COVID-19 crisis, then, is as the continuous interaction and dialogue between these cultural tribes. It is a process we need to understand and manage on its own terms, rather than just letting it happen and waiting to see who wins”.

With competing cultural values impacting on our attitudes to risk, how should our leaders create and manage consensus? Different governments and institutions, all confronted by more or less the same risk, have adopted very different management strategies and exit strategies to deal with the same virus. At the root of these differences is the issue of values, and how response strategies accommodate them.

We need established, legitimate processes that can harness the inherent conflict between the different cultural narratives in any given society or organisation. We need to be able to argue it out constructively to make sure we are aware of the various primary risks we face, and then be able to decide collectively which to  manage now, and which to set aside temporarily.

We have seen rapid shifts in society’s assumptions in the space of a few months. This will inevitably change the unwritten rules of social interaction and social boundaries.  Therefore, by extension, the cultures of our organisations will change. In short, your company culture won’t be the same as it was before the lockdown.

It will therefore be very difficult to predict the impact of the COVID-19 outbreak on attitudes to risk among customers, employees and investors. In this session, Anette will provide us with some insights that will help us understand what the implications of these shifts might be for the way we manage risk in business; what has changed, what might change back and what might never be the same again.

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