2015.10.07 risk culture

Thanks for your support !

LIVING AND

WORKING IN A

RISKIER WORLD

PROFESSION – INNOVATION – DIVERSITY

BRUSSELS, 20-21 October www.ferma.eu

FORUM 2015 Venice, Italy 4-7 October

Cultural Risk workshop

Attitudes to risk across cultures

Candida Snow – Snow Culture & Communication

Culture in risk and insurance Tim Astley – Zurich Insurance Company Limited

Global business, global culture?

John Ludlow – Director, Leading in Risk Limited

Moderator: Julia Graham

President of FERMA

2



A quick experiment



What did you see ?



risk compliance a contract deadlines planning corruption trust leadership …



Culture is the accepted values, customs, attitudes and behaviours of a group of people

Culture is the filter through which

we perceive, evaluate and judge

National

Corporate Professional/

department/team



Symbols

Heroes, role models

Rituals, practices

Values

What is culture?



Value differences can be explained by four

dimensions of national culture

Power distance « PDI »

Individualism / Collectivism « IDV »

Masculinity / Femininity « MAS »

Uncertainty avoidance « UAI »

Professor Geert Hofstede



Power distance

Low power distance

(PDI-)

responsibility delegated

hierarchy for convenience

same rules for all

initiative

High power distance

(PDI+)

responsibility at top

hierarchy is existential

privileges

obedience



0 – 20

21 - 40

41 - 60

61 - 80

81 - 100

> 100

Power distance



Individualism

Collectivism

the group: “We”

group responsibility

value standards differ for

‘in-group’

loss of ‘face’, shame

relationship oriented

Individualism

the individual: “Self”

individual responsibility

value standards apply to

all

loss of self-respect, guilt

task oriented



0 - 20

21 - 40

41 - 60

61 - 80

81 - 100

Individualism



Masculinity

feminine (MAS -)

doing your best

levelling

consensus

failure allowed

sympathy for the underdog

masculine (MAS +)

being the best

status

competition

failure is a disaster

admiration for achievers



0 - 20

21 - 40

41 - 60

61 - 80

81 - 100

Masculinity



Uncertainty avoidance

Low uncertainty avoidance

(UAI -)

low need for structure and rules

comfortable with unfamiliar risks

what is different is interesting

relaxed

High uncertainty avoidance

(UAI +)

need for structure and rules

comfortable with familiar risks

what is different is dangerous

stressful



0 - 20

21 - 40

41 - 60

61 - 80

81 - 100

> 100

Uncertainty avoidance



Action and Implementation

Time

Action

German, Austrian

Dutch, Danish

American / UK

Belgian, French



Distribution of scores within the EU

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Cultural aspects in a risk / insurance context

Tim Astley

Ferma conference, October 2015, Venice



Inward

Regulatory drive

How to ensure good / effective risk

management

Search for consistency across all

levels of the business (decision

making)

Two lenses – inward and outward looking

Why is it important to an insurer?

26

Outward

Need for full understanding of risk and resilience (current approach – on-the-ground, grading)

What determines how a company will handle a loss?

Need metrics to determine what ‘good’ looks like



Ability to gain insight is different

Inward

How to approach these two challenges?

27

Define ways to embed them

e.g.

• Commitments in personal objectives

• Behaviour of ‘key risk takers’

• Understand through employee surveys

• Clarify relationship between business

decisions and risk tolerance

• Analyse ‘incident’ responses – learning

curves

Identify what attributes are important

e.g

• Decision making

• Leadership

• Staff involvement

• Outcome orientation

• Meritocratic

• Market focus

• Innovation

Outward

• Relies more on experience, broad indicators and gut feel



Examined claims with significant business interruption

(consequential loss) component

Identified key elements that influenced how well claim was

handled

We built a picture of what ‘good’ resilience looks like

Looking from the outside

28



BI Claims lessons learned

29

Determining Resilience

Is there a clear understanding /

definition of the critical activities?

If something did go wrong, what

would the company do?

Has the company demonstrated the

credibility of alternatives?

What broader business issues might

influence decision making?

Impact assessment

Recovery strategies

Proven / tested

capability

Business culture ?



Need to understand:

Market dynamics and business drivers

Consistency of objectives

Silos, decision making

Track record

Employee profile

What does ‘culture’ consist of?

30



What does ‘good’ look like?

31

Positive Negative

How good is the information flow?

Are there any concentrations of knowledge?

What is the ‘residence time of key employees*?

(* might be the entire workforce or influential individuals)

How easy is it to make a decision?

Is there consistency of purpose across functions / businesses?

How homogeneous is the organisation?

How successful is the business? How dominant is the financial imperative?

How well do they understand their business?

To what extent does technical skill align with business skill?

How well have they done it before (responded to a crisis)?

How are external relationships managed?

How cooperative is management?

What evidence is there of good management controls?

Looking (from the outside) for indicators that might predict behaviours in ‘stress’ situations



‘Hard’ aspects of risk management and planning are

important

Ensure the ‘soft’ side is not ignored

Requires an understanding of culture

Show how organisations can be adapted

Enhanced resilience

Conclusion

32



Global business

Global culture?

John Ludlow

Director

Leading In Risk Limited

[email protected]

+44 (0)7808 094542

mailto:[email protected]







Business yesterday

• Business structured around geographies

• Oversight limited

• Staffed with professional expat leaders

• Policies mainly local and often detached from PLC policies

• Business built in the local culture and environment

• Products and services delivered to regional needs

All my troubles seemed so far away



What changed

• Greater trade between and within regions

• High levels of labour migration within and between countries

• Out-sourcing and off-shoring of production and support

• Supply-chains have become more international

• Shift in the balance of power towards Eastern economies

• Internet based systems and communication

• Globalisation of consumer expectations

• Intangible assets, like brands, have risen in value

Complex, Integrated, Fast, Consistent and Transparent



Brands evolved with the economy

As the economy evolved, driven by competition and enabled by technology, so too have brands

• Branded experiences became the new growth area and global markets enabled global brands

Raw Materials

Goods

Services

Experiences



Brands are more important & fragile than ever

Brands now represent Business Ecosystems

•Complex and opaque supply chains – but can I trust what I am buying?

•Web-based technology – but who has my data and what are they using it for?

•Brand franchising – but who am I trusting?

Trust is in decline for many

•Social media is enabling consumers to communicate

•Regulators are moving to protect consumers

•Reputation that took years to build can be destroyed in an instant

Strong global brands are trusted and valuable



Strong and resilient global brands

Centrally driven to be relevant, distinctive, repeatable and consistent

• Leaders of their business ecosystems

• Mature Leadership

• Matrix Management

• Manage to outcome and effect rather than to task

Operate responsibly and sympathetically in local cultures

• Disciplined

• Stakeholder aware and consumer centric

• Proactively responsible

• Responsive to issues



Strong global brands think globally

Strong Leadership

• Purpose, beliefs and values

• Vision; mission, ambition, strategy and behaviours

• Organisation of the business resources by market segments and regions

Attractive Brand Stories

• History and culture of the business – how things get done and why

• Brand position in the competitive landscape

• Clarity about customers – who they are and what they expect

• Product & service essentials and differentiators



Strong global brands think globally

Common and proactive management systems

• Policies, procedures and controls within the business

• Technology and information systems

• People development and management systems

• Active communication

• Stakeholder groups

• Internal and External

• Broadcast and Listen



Leadership at IHG - Vision



Behaviours

Winning Ways

• Identified by staff members from around the world

• Behaviours that they felt made IHG successful

Mature Leadership

• Doing the right thing and showing we care for others

• Working together and treasuring diversity

• High performance culture



Purpose

Guest centric mission

Emotional calling

Business ecosystem

Brand strategy



Leadership at IHG - Ambition



Leadership at IHG - Trust

IHG is a brand led business

We champion the trusted reputation of our brands to drive our performance

We consistently deliver on our brand promises

Trust & Love

Brands

People

Delivery



Build Trust By Doing Business Responsibly

RESPONSIBLE

DELIVERY

RESPONSIBLE

BRANDS

RESPONSIBLE

PEOPLE

& risk

measure Compliance

Monitor program delivery &

emerging issues

deliver

consistent & repeatable

experiences

do no harm do good winning

live our

effort is ensure

valued

RESPONSIBLE

BUSINESS

maturity ways



Responsible Business Programmes

Example:

Safe Hotel



Protect Reputation By Managing Crises

PREVENT

•Risk assessments

•Responsible Business Programmes

•Crisis response and crisis

communications

•Risk and Crisis

Management capability

RESPONSE

•Media monitoring,

intelligence gathering

•Crisis training, scenario

planning

PREPARE

•Lessons learned, review or revise strategy

•Rebuilding stakeholder trust

RECOVER

Pre-Crisis

/ Incident

Post-Crisis

/ Incident



Summary – it is all about trust and reputation

Acting locally to build and maintain personal relationships

West – we leave home, go to work and do a deal

Plus in America the law comes first

East – think relationships and marriage

Thinking globally to deliver consistently

Leadership and Vision

95% global discipline and brand stories

Common Systems

Active Communication



50

Thanks for your support !

John Ludlow

Director

Leading In Risk Limited

[email protected]

+44 (0)7808 094542

Tim Astley

European Regional Practice Leader

Zurich Insurance Company Limited

[email protected]

Candida Snow

Snow Culture & Communication

[email protected]

www.snowcc.info

T: +31 38 466 2478

M: +31 655 842 762








2015.10.07 risk culture

Education