Skip to main content Accessibility help

We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.

Close cookie message
×
Hostname: page-component-cd9895bd7-q99xh Total loading time: 0 Render date: 2024-12-23T17:10:54.284Z Has data issue: false hasContentIssue false

2 - Risk Culture and Information Culture

Why an ‘Appetite for Knowledge’ Matters

from Part I - Risk Culture Conceptual Underpinnings

Published online by Cambridge University Press:  22 May 2020

By
Michael Power
Edited by
Michelle Tuveson ,
Daniel Ralph  and
Kern Alexander
Michelle Tuveson
Affiliation:
Judge Business School, Cambridge
Daniel Ralph
Affiliation:
Judge Business School, Cambridge
Kern Alexander
Affiliation:
Universität Zürich
Get access

Summary

This chapter explores the centrality of risk information to the construction of managerial agency. It is argued that this theme has been neglected by policy makers and others in the debate about risk culture in financial services. This debate is characterised by an underlying individualism in the approach to culture in general, and risk culture specifically, focusing ultimately on values and incentives as the core features of behaviour, from traders to board members. In contrast, drawing on a range of studies in the organisational sociology of risk, it is argued that information infrastructures are profoundly cultural and shape organisational values and the quality of decision making. Three illustrative themes – networking, technology and governance - are discussed and generate three indicative and testable propositions about the importance of information for risk culture. These three discussions also point to the fundamental role of an “appetite for knowledge” which varies between organisations and across fields. This revealed appetite is indicative and generative of organisational culture. Efforts to reform the culture of the financial services industry should therefore begin with understanding how information infrastructures do or don’t shape what counts as “doing the right thing”, rather conducting endless attitudinal surveys of individuals.

Keywords

informationknowledgerisk appetiterisk culturedisasterindividualism
Type
Chapter
Information
Beyond Bad Apples
Risk Culture in Business
 , pp. 42 - 72
Publisher: Cambridge University Press
Print publication year: 2020

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Atkins, D., Fitzsimmons, A., Parsons, C. and Punter, A. (2012). Roads to Ruin: A Study of Major Risk Events: Their Origins, Impact and Implications. London: AIRMIC.Google Scholar
Bartlett, C. A. and Ghoshal, S. (1994). Changing the role of top management: beyond strategy to purpose. Harvard Business Review, 72(6), 79–88.Google Scholar
Beasley, M., Branson, B. and Hancock, B. (2010). Developing Key Risk Indicators to Strengthen Enterprise Risk Management. New York: Committee of Sponsoring Organizations of the Treadway Commission.Google Scholar
Besharov, M. L. and Khurana, R. (2015). Leading amidst competing technical and institutional demands: revisiting Selznick’s conception of leadership. In Kraatz, M., ed., Institutions and Ideals: Philip Selznick’s Legacy for Organizational Studies. Emerald Group Publishing Limited, pp. 53–88.CrossRefGoogle Scholar
Boddy, C. R. (2017). Psychopathic leadership: a case study of a corporate psychopath CEO. Journal of Business Ethics, 145(1), 141–56.CrossRefGoogle Scholar
Boholm, Å. and Corvellec, H. (2011). A relational theory of risk. Journal of Risk Research, 14, 175–90.Google Scholar
Bower, M. (2003). Company philosophy: ‘the way we do things around here’. McKinsey Quarterly, no. 2, 110–17.Google Scholar
Clarke, L. and Short, J. (1993). Social organization and risk: some current controversies. Annual Review of Sociology, 19(1), 375–99.CrossRefGoogle Scholar
Coffee, J. (2006). Gatekeepers: The Professions and Corporate Governance. Oxford: Oxford University Press.Google Scholar
COSO (Committee of Sponsoring Organizations of the Treadway Commission) (2004). Enterprise Risk Management – Integrated Framework: Application Techniques. New York: COSO. https://bit.ly/2p9C2JrGoogle Scholar
Davies, W. (2018). Sabotaging progress: the cultural economy of resentment in late neoliberalism. In Andersson, J. and Godechot, O., eds., Destabilizing Orders – Understanding the Consequences of Neoliberalism. Proceedings of the MaxPo Fifth-Anniversary Conference, Paris, January 12–13, 2018. Paris: Max Planck Sciences Po Center on Coping with Instability in Market Societies, pp. 9–12.Google Scholar
Davies, W. and McGoey, L. (2012). Rationalities of ignorance: on financial crisis and the ambivalence of neo-liberal epistemology. Economy and Society, 41(1), 64–83.CrossRefGoogle Scholar
Douglas, M. and Wildavsky, A. (1983). Risk and Culture. Berkeley: University of California Press.CrossRefGoogle Scholar
Douglas, M. (2013). Essays on the Sociology of Perception. London: Routledge.Google Scholar
Edmonds, T. (2014). LIBOR, Public Inquiries & FCA Disciplinary Powers. House of Commons Library Briefing Paper No. 6376.Google Scholar
Enfield, N. J. (2017). Distribution of agency. In Enfield, N. J. and Kockelman, P., eds., Distributed Agency. Oxford: Oxford University Press, pp. 9–14.Google Scholar
Etienne, J. (2013). Ambiguity and relational signals in regulator–regulatee relationships. Regulation & Governance, 7(1), 30–47.CrossRefGoogle Scholar
Etienne, J. (2014). The politics of detection in business regulation. Journal of Public Administration Research and Theory, 25(1), 257–84.Google Scholar
Gephart, R. P. Jr., Van Maanen, J. and Oberlechner, T. (2009). Organizations and risk in late modernity. Organization Studies, 30(2–3), 141–55.CrossRefGoogle Scholar
Greve, H. R., Palmer, D. and Pozner, J. E. (2010). Organizations gone wild: the causes, processes, and consequences of organizational misconduct. The Academy of Management Annals, 4(1), 53–107.CrossRefGoogle Scholar
Hall, M. and Fernando, R. (2016). Beyond the headlines: day-to-day practices of risk measurement and management in a non-governmental organization. In Power, M., ed., Riskwork: Essays on the Organizational Life of Risk Management. Oxford: Oxford University Press, pp. 72–90.Google Scholar
Hall, M., Mikes, A. and Millo, Y. (2013). How experts gain influence. Harvard Business Review, 91(7), 70–4.Google Scholar
Hall, M., Mikes, A. and Millo, Y. (2015). How do risk managers become influential? A field study of toolmaking in two financial institutions. Management Accounting Research, 26, 3–22.Google Scholar
Hilgartner, S. (1992). The social construction of risk objects: or, how to pry open networks of risk. In Short, J. F. and Clarke, L., eds., Organizations, Uncertainties and Risk. Boulder, CO: Westview Press, pp. 39–53.Google Scholar
Janis, I. L. (1982). Groupthink: Psychological Studies of Policy Decisions and Fiascoes. Boston: Houghton Mifflin.Google Scholar
Jordan, S., Jørgensen, L. and Mitterhofer, H. (2013). Performing risk and the project: risk maps as mediating instruments. Management Accounting Research, 24(2), 156–74.Google Scholar
Jørgensen, L. and Jordan, S. (2016). Day-to-day riskwork in inter-organizational project management. In Power, M., ed., Riskwork: Essays on the Organizational Life of Risk Management. Oxford: Oxford University Press, pp. 50–71.CrossRefGoogle Scholar
Kekes, J. (1984). ‘Ought implies can’ and two kinds of morality. The Philosophical Quarterly, 34(137), 459–67.Google Scholar
Kirkbride, J. and Letza, S. (2005). Can the non‐executive director be an effective gatekeeper? The possible development of a legal framework of accountability. Corporate Governance: An International Review, 13(4), 542–50.Google Scholar
Luburić, R. (2017). Strengthening the three lines of defence in terms of more efficient operational risk management in central banks. Journal of Central Banking Theory and Practice, 6(1), 29–53.CrossRefGoogle Scholar
Maguire, S. and Hardy, C. (2013). Organizing processes and the construction of risk: a discursive approach. Academy of Management Journal, 56(1), 231–55.Google Scholar
March, J. G. and Shapira, Z. (1987). Managerial perspectives on risk and risk taking. Management Science, 33(11), 1404–18.CrossRefGoogle Scholar
Mayer, C. (2018). Prosperity: Better Business makes the Greater Good. Oxford: Oxford University Press.Google Scholar
McConnell, P. (2013). Systemic operational risk: the LIBOR manipulation scandal. Journal of Operational Risk, 8(3), 59–99.Google Scholar
McGoey, L. (2012). Strategic unknowns: towards a sociology of ignorance. Economy and Society, 41(1), 1–16.Google Scholar
Meyer, J. W. and Rowan, B. (1977). Institutionalized organizations: formal structure as myth and ceremony. American Journal of Sociology, 83(2), 340–63.Google Scholar
Mikes, A. (2009). Risk management and calculative cultures. Management Accounting Research, 20(1), 18–40.CrossRefGoogle Scholar
Mikes, A. (2016). The triumph of the humble risk officer. In Power, M., ed., Riskwork: Essays on the Organizational Life of Risk Management. Oxford: Oxford University Press, pp. 253–73.Google Scholar
Miller, P., Kurunmaki, L. and O’Leary, T. (2008). Accounting, hybrids and the management of risk. Accounting, Organizations and Society, 33(7–8), 942–67.CrossRefGoogle Scholar
Miller, P. and O’Leary, E. T. (2000). Value Reporting and the Information Ecosystem. London: PricewaterhouseCoopers.Google Scholar
Ocasio, W. (2005). The opacity of risk: language and the culture of safety in NASA’s space shuttle program. In Starbuck, W. and Farjoun, M., eds., Organization at the Limit: Lessons from the Columbia Disaster. Oxford: Blackwell, pp. 110–21.Google Scholar
Palermo, T. (2016). Technoculture: risk reporting and analysis at a large airline. In Power, M., ed., Riskwork: Essays on the Organizational Life of Risk Management. Oxford: Oxford University Press, pp. 150–71.Google Scholar
Perrow, C. (1984). Normal Accidents: Living with High Risk Technologies. New York: Basic Books.Google Scholar
Power, M. (1997). The Audit Society. Oxford: Oxford University Press.Google Scholar
Power, M. (2004). The Risk Management of Everything. London: Demos.Google Scholar
Power, M. (2007). Organized Uncertainty: Designing a World of Risk Management. Oxford: Oxford University Press.Google Scholar
Power, M. (2014). Risk, social theories and organizations. In Adler, P., du Gay, P., Morgan, G. and Reed, M., eds., The Oxford Handbook of Sociology, Social Theory and Organization Studies: Contemporary Currents. Oxford: Oxford University Press, pp. 370–92.Google Scholar
Power, M., Palermo, T. and Ashby, S. (2013). Risk Culture in Financial Organizations: A Research Report. London: Centre for Analysis of Risk and Regulation, London School of Economics.Google Scholar
PRA and FCA (Prudential Regulation Authority and Financial Conduct Authority) (2015). The Failure of HBOS plc (HBOS): A Report by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). London: Bank of England.Google Scholar
Selznick, P. (1957). Leadership in Administration: A Sociological Interpretation. New York: NY: Harper & Row.Google Scholar
Short, J. (1984). The social fabric of risk: toward the social transformation of risk analysis. American Sociological Review, 49(6), 711–25.Google Scholar
Short, J. and Clarke, L., eds. (1992). Organizations, Uncertainties and Risks. Boulder, CO: Westview Press.Google Scholar
Steck, H. (2003). Corporatization of the university: seeking conceptual clarity. The Annals of the American Academy of Political and Social Science, 585, 66–83.CrossRefGoogle Scholar
Turner, B. (1976). The organizational and interorganizational development of disasters. Administrative Science Quarterly, 21(3), 378–97.Google Scholar
Turner, B. and Pidgeon, N. (1997). Man-Made Disasters, 2nd ed. London: Butterworth–Heinemann.Google Scholar
Vaughan, D. (1996). The Challenger Launch Decision. Chicago: University of Chicago Press.Google Scholar
Vaughan, D. (2005). Organizational rituals of risk and error. In Hutter, B. and Power, M., eds., Organizational Encounters with Risk. Cambridge: Cambridge University Press, pp. 33–66.Google Scholar
Walker, D. (2009). A Review of Corporate Governance in UK Banks and Other Financial Industry Entities. London: HM Treasury.Google Scholar
Weick, K. E. (1993). The collapse of sensemaking in organizations: the Mann Gulch disaster. Administrative Science Quarterly, 38(4), 628–52.Google Scholar
Zhivitskaya, M. (2015). The practice of risk oversight since the global financial crisis: closing the stable door? Unpublished PhD thesis, University of London.Google Scholar
Zhivitskaya, M. and Power, M. (2016). The work of risk oversight. In Power, M., ed., Riskwork: Essays on the Organizational Life of Risk Management. Oxford: Oxford University Press, pp. 91–109.Google Scholar

Save book to Kindle

To save this book to your Kindle, first ensure [email protected] is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

Available formats
×