Risk Culture in Technology Management
Neyer B, Borgstedt P, Schewe G
Risk management was discussed thoroughly in the last decades and changed the way decisions are evaluated. Formal risk management processes were implemented and nowadays a variety of instruments shows the professionalization of the field (COSO, 2004; ISO, 2009). Nevertheless, these formal risk management processes need to be evaluated regarding their actual impact on risk awareness and behavior in innovative decisions. Risk culture, i.e. the way of dealing with uncertainty in corporations, emerged as a field of interest, but is not yet fully understood. First frameworks were published throughout the last years, but remain conceptual and do not cover all relevant aspects (Banks, 2012; IRM, 2012; Kelly, 2009; Levy et al., 2010). While financial institution are within the center of discussions, technology firms can benefit from a strong risk culture as well. Specifically within the field of technological innovations, characterized by high uncertainties, the way of dealing with these uncertainties is crucial. The aim of this presentation is therefore to present a measurement that assesses risk culture in technology firms regarding decisions in a context of innovation. With a semi-structured interview approach, 27 extensive interviews with risk management experts were carried out. Grounded in corporate culture (Deal & Kennedy, 1982; Hofstede, 1980; Schein, 2004) as well as risk management theory, we examine two areas: (1) Are there existing approaches to manage risk culture? (2) Which facets are not yet integrated into existing frameworks? Using content analysis, these explorative interviews therefore allow for the identification of new factors as well as the evaluation of factors already discussed in literature. A further differentiation of experts from technology firms and experts from other areas (such as consulting, financial institutions or service providers) will be made. First results indicate that some known factors (like tone at the top, decision-making processes or risk-related incentives ) are regarded as highly important. In contrast, other factors are discussed in literature (e.g. individual risk appetite) but their validity is challenged in practice. At last, new factors like the way of dealing with mistakes and “bad news”, trust-related issues or soft skills of risk managers emerge as highly important. In conclusion, a lot of efforts have to be done to create a risk-aware culture and by that strengthening the robustness of the innovation process. The implications of the results are therefore twofold: Firstly, approaches to shape an adequate risk culture are identified and discussed. Secondly, the newly developed scales as well as existing constructs need to be validated in order to enhance risk culture in decisions related to innovations.