Which scenario most indicates an organization may have a weak risk culture?

A scenario where management and employees lack agreement on appropriate conduct clearly indicates a weak risk culture within an organization. A strong risk culture is characterized by a shared understanding and alignment on values, ethics, and acceptable behaviors regarding risk among all members of the organization. When there is a disconnect between management and employees, it can lead to confusion, differing priorities, and a lack of accountability in risk management practices.

This absence of alignment can result in employees not feeling empowered to report risks or challenge inappropriate conduct, which in turn can lead to an organizational environment where risks are not managed effectively. A cohesive and well-defined risk culture encourages everyone in the organization to act according to a common set of values and expectations, making it crucial for risk awareness and response.

In contrast, frequent compliance training sessions, clear communication of company values, and regular audits of risk management practices suggest a proactive approach to risk management and culture building, rather than indicating weaknesses in those areas. Thus, the lack of agreement on conduct is a red flag for a weak risk culture, highlighting the need for improved communication and alignment within the organization.