Risk culture in the financial services sector – an underestimated strategic success factor

Volatile markets, geopolitical tensions, technological disruption and regulatory requirements present financial services providers with new complexities in risk management. Risks do not arise in isolated instances, but across the entire value chain, and cannot be managed solely through rules, models and controls.

In this environment, the decision-making behaviour of managers and employees is increasingly coming into focus. Risk culture describes the lived values, norms and behaviours that shape how alternative, potentially dangerous scenarios are perceived, discussed and managed responsibly, particularly where formal guidelines reach their limits.

Risk culture is a key management and governance factor

The white paper demonstrates why risk culture is not merely a peripheral consideration, but a key factor in management and governance. It explains how risk culture can be measured, assessed and systematically developed in line with risk appetite, strategy and regulatory expectations.

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"Risk Culture in the Financial Service Industry"

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Risk Culture Model with eight cultural dimensions

KPMG helps organisations strengthen their risk culture by focusing on the behavioural and cultural factors that shape day-to-day decision-making. Our Risk Culture Model, which is based on academic research and decades of practical experience, identifies eight cultural dimensions that influence how people perceive risks, voice concerns, challenge decisions and take responsibility.

The model provides executives with a clear and practical framework for assessing, reflecting on and specifically improving risk culture in line with regulatory expectations and the demands of day-to-day operations.

Three key takeaways at a glance

A robust risk culture creates value – not just protection

Organisations with a resilient, deeply ingrained risk culture consistently outperform their peers in terms of the quality of their decision-making, stakeholder trust and crisis management. A robust risk culture not only prevents undesirable outcomes: it supports ethical growth in complex environments, fosters innovation and helps to attract and retain skilled professionals in an increasingly competitive landscape.
Risk culture is dynamic and can be shaped and managed

A risk culture is shaped by day-to-day decisions, interactions and leadership role models. Structured assessments provide clarity on the current situation and form the basis for targeted measures to strengthen the risk culture.
A robust risk culture makes business and operating models effective

Risk culture is ever-present and embedded in leadership, decision-making and control structures. When it is consciously aligned with the organisation’s risk appetite and formal frameworks such as the three lines of defence model, it becomes a strategic asset that strengthens resilience and accountability. If, on the other hand, it remains unmanaged, it can just as easily undermine governance – through inconsistent behaviour and weakened oversight.