Introduction: The Cultural Undercurrent Driving Risk
Throughout my professional journey in the banking sector- whether managing regional business operations, leading credit risk teams, or now engaging boards and senior executives across diverse industries through consultancy assignments and structured capacitybuilding interventions- I’ ve observed something fundamental: culture is the silent driver of performance, ethics, and resilience. It is the invisible hand that can either uphold an organization’ s strategy or quietly undermine it.
In today’ s dynamic business landscape, culture has rightfully moved from being a peripheral topic to becoming a boardlevel strategic issue. A healthy culture fosters innovation, ethical conduct, and adaptability. A toxic one, on the other hand, can trigger ethical lapses, operational failures, and reputational harm. My experience leading risk teams, attending board strategy, credit and risk committee meetings, and developing policies across different sectors has reaffirmed that culture must be addressed with the same seriousness as any other core enterprise risk.
Integrating corporate culture into Enterprise Risk Management( ERM) frameworks is no longer optional- it’ s essential. In fact, research by LSA Global shows that culture accounts for 40 % of the difference between high-performing and weak teams. That’ s not just a statistic- it’ s a wake-up call. Culture, whether toxic or healthy, directly shapes how an organization performs, adapts, and survives. This article explores the strategic implications of toxic culture, modern perspectives on cultural evolution, and the critical roles of boards and leadership in nurturing a sustainable, risk-intelligent organizational culture.
To truly understand how culture can pose risks or create value, we need to look at how its role has evolved- from a vague concept to a core part of daily operations.
The Evolution of Culture: From Icebergs to Operating Systems
In my earlier years in employment, culture was often described using the iceberg metaphor- what’ s visible on the surface( policies, dress codes, slogans, behaviors) is only a fraction of what lies beneath: values, beliefs, and assumptions. However, in my more recent work with organizations across various sectors, I’ ve come to see that culture today acts more like an operating system. It is embedded in every decision, interaction, and response within a business- driving not only how things are done, but how risks are perceived and managed.
Through my leadership experience across diverse business units and regions, I’ ve come to recognize that the true essence of an organization’ s culture often reveals itself in moments of pressure and purpose- how teams rally during crises, how employees show up for community initiatives, and how everyday interactions reflect shared values far beyond what any policy document can prescribe.
But to lead culture effectively, we must view it not just as embedded, but as multi-dimensional- shaped by leadership, purpose, systems, and behavior.
A Multi-Dimensional View of Culture
Culture isn’ t a one-dimensional concept- it’ s a living system shaped by leadership, structures, and daily behaviors. It shows up not just in mission statements or annual retreats, but in how people interact, how decisions are made, and how values are upheld under pressure
One of the most important shapers of culture is leadership. The character of a leader is culture’ s first ambassador. Your words may carry weight, but it’ s your actions that build credibility. When I modeled integrity, openness, and accountability, I noticed my teams mirrored those same values. This modeling from the top matters immensely. During my tenure at the helm of a key risk management division, I sat on multiple board-level committees and witnessed firsthand how leadership alignment- or the lack of it- impacted cultural tone. When leaders are united in purpose and values, culture cascades more effectively across the organization. When they ' re not, the disconnect creates confusion and mistrust.
Culture is also about collective purpose- it’ s the invisible thread that binds people together through shared meaning, behavior, and trust. I remember working with a management trainee while appraising a project finance application; I was guiding him through the process when he paused and offered a perspective I hadn’ t considered, it shifted my analysis. Later, he told me,“ I didn’ t think someone at your level would actually take my input seriously.” That moment stayed with me- because culture is about the human experience. It’ s about making people feel seen, heard, and valued- whether in corporate offices, schools, hospitals, or community spaces.
Modern thinkers like Amy Edmondson, Edgar Schein, and Simon Sinek have reinforced these lived truths. Edmondson’ s concept of psychological safety- where people feel safe to speak up without fear- resonates deeply with my own leadership journey. Sinek reminds us that“ people don’ t buy what you do; they buy why you do it,” emphasizing the importance of purpose. And Schein teaches that culture lives not just in visible symbols or processes, but in deeply held beliefs and assumptions.
What a Healthy Corporate Culture Really Entails
A healthy culture is built on interlinked elements that drive both purpose and performance- and, crucially, help organizations manage risk more intelligently.
It starts with purpose. When employees clearly understand why they do what they do- especially in roles like credit evaluation or risk oversight- it transforms routine tasks into meaningful contributions. Purpose increases engagement, strengthens motivation, and fosters a deeper connection to the organization’ s mission.
Closely tied to this is ethical clarity. In my leadership roles, I always emphasized that how we reach our targets is just as important as achieving them. When employees see consistency between stated values and actual behavior, it fosters trust, reinforces accountability, and strengthens the organization from within.
Psychological safety- as highlighted earlier- isn’ t just about emotional comfort. It’ s a foundational element of highperforming teams. I’ ve always encouraged open dialogue, whether during team strategy sessions or branch reviews. When people feel safe to raise red flags, admit mistakes, or challenge assumptions, they become better problem-solvers. It builds innovation, prevents risk, and enables a culture of continuous improvement.
Another critical element is true accountability. In my experience, when people understand their responsibilities and feel trusted to deliver, they naturally take ownership. This culture of responsibility generates mutual respect across hierarchies and drives both individual and collective performance.
Finally, a learning mindset is essential